This is a great question and it doesn’t really have a simple answer. Here are a few things to consider:
Your budget for the trip
Iceland isn’t exactly the cheapest country to travel to. For those who are budget conscious, a camper might be a good option. When you start comparing hotel-, Airbnb- or guesthouse cost with the cost of renting a camper you might be surprised. Let us save you some time and tell you that the camper is way, way cheaper (unless you’re staying in someone’s dog house in the garden)! Not only is it cheaper because of the cost of accommodation. It’s also cheaper because you can cook some of your meals in the camper instead of eating out all the time. Normally you can’t do that in hotel rooms, except if you pay a lot of money for a room with a small kitchen.
Your travel style
Even if you don’t really care about the budget, you might want to consider the restrictions of staying in a hotel. In Iceland, you probably must book your hotel room well in advance of your journey. At least we’d recommend it if you plan on arriving during high season and/or want to have some options when you’re choosing accommodation. Some people are fine with booking in advance and like to have each day planned before arriving. There’s nothing wrong with that!
If you’re one of those people and don’t mind the cost of hotel rooms you probably want to rent a regular car. Obviously, staying in a hotel room is a slightly more of a luxury than sleeping in a car. Even a really, really, really comfortable one like our campers!
Are you one of those free spirit types who likes to simply show up with nothing planned and just make it up as you go a long? Then a camper will suit you perfectly. Do you feel like going north? Driving the South Coast? Staying in Reykjavík? You can go (almost) anywhere, at any time, in a camper.