That happened two days ago.
As a quick recap, back before the Icelandic economic crisis, Icelandic banks (pretty much unbridled by regulations and oversight) were offering saving accounts with unusually high interest rates in e.g. the UK, the Netherlands and Germany. When the economic crisis happened and those banks folded, a dispute started concerning whether the Icelandic state would have to reimburse foreign savers for the assets lost there, or whether this was a case of "you gambled, you lost, better luck next time".
I can't comment on whether Iceland should be required to do so or not, but needless to say, authorities in the UK and the Netherlands were quite vocal in their opinion that the answer was "yes", and there was a lot of negotiation behind closed doors. Ultimately, an agreement was reached with the Icelandic government, and a law was passed in Iceland, but people in Iceland protested, and the president refused to sign the law and put it up for a referendum, where a majority of people promptly rejected it.
Negotiations resumed, and last week, a new law was passed in parliament; however, there was still demand for a new referendum, and a petition calling for one garnered more than 40,000 signatures (in a country of ~320,000, mind you — 20% of all voters).
So the president decided to do just that: he refused to sign the law, and instead called for a referendum.
A lot of ink has been spilt over that decision already, and I'm gonna add some to it now: I think that this is absolutely the RIGHT decision. No matter what one's opinion is on the underlying dispute (as stated above, I do not have one; I simply don't know the details, so I have no basis for forming one), and no matter what one's opinion is on the current agreement and the new law, the resolution of the Icesave dispute is something that will shape Icelandic society for a long time; Iceland will be saddled with a debt of several billion EUR that'll take a generation (30 years) to pay off.
As such, I think it's important that the actual people who'll be paying the money and feeling the effects are heard: the actual constituents of society. It's one thing to accept such a deal when given a choice, but quite another to have it imposed without having any say; and although the government is loudly complaining right now that an elected government has been given the authority to decide on behalf of the people and thus should be able to do just that, particularly when a parliamental vote was not even very close, which this one wasn't (an argument that does have some merit), I think that in the long run, the government would be well-advised to remember that it is the servant of the people, not their master.
Of course, the whole thing's probably pretty academic, anyway, since polls have shown that a majority of Icelanders actually favor the agreement and want to put the whole Icesave issue to rest, finally. At the same time, I think people realize that a rejection of the agreement would have other far-reaching consequences; it's not a matter of voting to give away your money to pay someone else's debt or keeping it as much as it is a choice between two evils. But I really think that the psychological effects on society are the most important: give the people the ability to control its own fate, and you will avoid running into problems later on. Forcing through such a far-reaching law, even when the majority of people are in favor, could very well come back and haunt you in a decade or two.
So, kudos to the Icelandic president for not being afraid to actually use his powers, and for recognizing that the people matter; but also, kudos to the Icelandic government for working to resolve this conflict, and kudos to all of Iceland for cleaning up the mess left by a few.