New Years in Iceland

Hello all,
Myself and 3 friends are traveling to Iceland for New Years. We will be there from Dec 28 to Jan 4th. I was wondering if it makes sense to book a "New Years" tour that takes you to the bonfires and fireworks, or can we do this on our own really? Would we need a car? Also- we wanted to book some tours for glacier walking, northern lights, blue lagoon, etc. Should we book ahead, or do you think its possible (and cheaper) to book when we arrive in the city.
Also, I know very little about Iceland - so any other information you think we should know, please share away:)
Thanks!

Should we book ahead

No. You need to know about the weather forecast at short notice. The tourist offer is bookable at short notice in the off-season, except for less common special things, but you aren't talking about those. Remember that you are there at the time of shortest daylight, so you only have about 5 hours in the middle of the day for anything that requires daylight.

Would we need a car?

If you are going on organised tours, no. If you want to go places yourself, yes. Given there are 4 of you, hiring a car would be much cheaper for sightseeing than booking tours. The only thing you mention that requires a tour operator is glacier walking, which would be heavily weather dependent.

I would suggest getting a guidebook and using on-line tourist info sites to research things that you can do. Have reserve things for when the weather is uncooperative.