Worth noting that my understanding is that the Icelandic government never insured these deposits into Icelandic banks by foreign entities. In the case of Great Britain, the British government decided to retroactively insure these deposits by British entities on behalf of the Icelandic banks. The issue at hand was whether the Icelandic government should retroactively insure the banks as well, and pay the British government off. The Icelandic government initially voted to do so, but the people said "hell, no!" in a referendum.
So in my opinion, the Icelanders didn't fail to pay a debt; they refused to incur one because the entire world has started feeling entitled to zero-risk bank deposits. Which is quite sensible: Iceland is a tiny country, 319,000 people, and Great Britain is quite large, 62 million people. Spreading billions of dollars of loss over Iceland's population is thousands or tens of thousands of dollars per capita. Spreading the same loss over Great Britain's population is tens or hundreds of dollars per capita. Iceland just can't afford to be insuring global banks, which is why the didn't and aren't.
So in my opinion, the Icelanders didn't fail to pay a debt; they refused to incur one because the entire world has started feeling entitled to zero-risk bank deposits. Which is quite sensible: Iceland is a tiny country, 319,000 people, and Great Britain is quite large, 62 million people. Spreading billions of dollars of loss over Iceland's population is thousands or tens of thousands of dollars per capita. Spreading the same loss over Great Britain's population is tens or hundreds of dollars per capita. Iceland just can't afford to be insuring global banks, which is why the didn't and aren't.