This is the first Spyro game where you actually do something with those gems that you collect. Gems are needed for you to purchase power-ups and different things you will need to complete the worlds. A red gem is worth one gem, a green worth 5 gems, a purple worth 25 gems, and a yellow gem is worth 100 gems. You have the ability to get as many gems as you want, there is no finite number of them that comes from fallen enemies. There is a finite number that comes from containers, though, as they do not regenerate. Here is a list of the gem containers and the different ways to break them.
they made a gem worth 100