What do Gems do? like Garnets. Rubys, Pearls? can you smith them some how? i got bunch of flawless garnets and such and i dunno what to do with them? might be a newb questions, but if i never ask, ill never find out.

Also, can anyone tell me how soul gems work? ive been able to trap wolves into petty gems, but what gems do i need for bigget opponents?

I think gems are just credit chits you can just sell off, some NPCs in the game may also request you find some for them.

As for Soul Gems, the bottom line is basically the tougher the enemy, the higher their soul quality will be.

A petty soul gem can only contain a petty soul, a lesser can contain both a lesser or a petty, a common can contain a common, lesser, or petty, etc.

gems can be used in making jewelry with the smithing skill, stuff like the silver garnet rings and the like. Those tend to sell better than just the gems and you can enchant them.

you can make rings and jewelry with blacksmithing. only thing i have found so far. you get them from mining ore a lot too.

gems are for smithing jewelry. which is used to create enchanted jewelry (better jewelry = more enchanting "room" - at least thats how it works in oblivion).

soul gems are used to capture souls.. which are used as "funding" for enchanting. higher level creatures require higher level soul gems... but they also provide better enchanting.

theyre also used to recharge your weapons.

besides smithing some things, in all the past games (back to morroind actually, i think you could use them in daggerfall) they were only for decoration/selling/possible gathering quest which i assume will be the case for skyrim (if you get a lot of flawless gems they might glow like in oblivion, i hope at least )