Coming from a nation of 300.000 people has its downsides, like lack of keyboard support on various platforms. So, when I got my awesome Nokia N9, I wasn't all that surprised that there was no text input option for "Íslenska" or Icelandic. Fortunately, The Nokia N9 is mostly open source and the on screen keyboard uses Maliit. For those who like custom keyboards, they can check out MesInput.
I have created a virtual keyboard file for Icelandic and contributed it to the MesInput project (awaiting confirmation).