In Skaftafell itself, you can walk and walk til your hearts content! We done 2 walks, one for one hour to the face of the glacier Skaftafellsjokull, the other a 1 1/2 hour walk to a lookout called Sjonarskar with views across all the glaciers. This route takes you past several waterfalls, the best being Svartifoss.
The highlight of the trip to Iceland was the glacier hike, with mountainguides.com. Its a 3hour trip for 3300Kr (£25!) and worth every penny. 2 guides take you up onto Svinafellsjokull, with crampons and an ice axe and you walk past crevasses, about 500m or so up the glacier. We had fab weather and the top of the glacier looked stunning. Take warm clothes, clothes and aht, and definately a camera! superb!