depends a bit on what your field of study will be and if you want to get a job in that same field after graduating. Iceland's a tiny country so the number of available jobs is going to be smaller than in Germany. If you're good at networking while you're here, finding a job will be much easier here after graduating. If people know you and your work and like you, jobs have a way of working out.
If you're looking to also have a community of other Pakistanis, this is probably not a great place. I've at least never met anyone from Pakistan here.