I dont know if you are still planning your trip but here is my advice...The bus is easy and cheaper, but just be aware there may be extra travel time because you have to drop some people off at hotels and then stop to switch over to a new bus to get to city center. A lot of people hit the Blue Lagoon on their way to or from the airport, so it is pretty easy. If you land at 5AM, the best way to go to Blue Lagoon is if you buy tickets early and show up when it opens (7AM) because it is not crowded yet. Honestly, you may be able to do both Blue Lagoon and a little bit of Reykjavik if you watch your time closely. Reykjavik is a smaller and interesting city, but mostly what I remember about Iceland are the tours/sites outside of the city. So, IMO, if you just do the Blue Lagoon you wont be missing out on too much, you will just have to go back again! One more thing, I dont know what the luggage situation is, but the Blue Lagoon does have storage if you cant check in/leave your bags at the airport.