This is a great great place to relax for an hour and learn about Iceland, it's volcanoes, rough nature and the history of the island. Cinema No2 is a family owned place. The husband is an awesome adventurer and film-maker. His documentaries area really worth seeing. His wife operates the small cinema and is one of the friendliest people I've met on the trip.
Tips: grab some take-away food or drinks before heading to the cinema. And get ready for a great projection!
I did go to the other bigger cinema in town. Their volcano movie was not half as interesting then the "home made" films you will watch at Cinema No2.
Check them out: http://www.thecinema.is/