Iceland is pretty sparsely populated and the ash is flowing away from the island. They evacuated about 800 people but there isn’t a lot more they can do.
Also they have plenty of experience with this sort of thing. Back in the late 60 or early 70s the capitol city was threatened by a lava flow and they managed to redirect it and even used it as some kind of harbor wall.
Perhaps you are refering to the Vestman Islands eruption? The harbor at Heimey was at risk of getting choked off, but...
http://en.wikipedia.org/wiki/Eldfell
I think there’s something less than 400,000 people on the whole island, but the ash has to make breathing hard, and of course it will destroy just about all electronic and mechanical devices it contacts.
Just seems strange that there’s been so little mention of how this is affecting the islanders.