Vesturbær is a very nice part of Reykjavik. It's quiet and residential, but only a very short walk from downtown. It has good shops, it's close to the sea, and it's chock full of quirky old side streets, with pedestrian alleys, quiet gardens, and old and new houses. It's also fixed in size, being bounded by downtown to the east, sea to the north and south, and seltjarnarnes to the west. (Itself bounded on three sides by sea) So it's not sprawling, and probably never will. It's a nice place.