I don’t know if there are really other types out there in the later levels, but four colors of Gems doesn’t really cut it for customizability. The fact that you have to shell out quite a bit of silver to test the effects of gems out (and also lose gem levels extracting) on a weapon discourages players from trying things out. I personally (and it seems like many others too) opted for green gems on my main weapon and yellow ones for boots since it was the most “safest option”.
Purple, Orange, White, and Black Gems would be nice additions.
Gems don’t scale well. Level 1 to Level 2 makes sense, but after that the return on investment diminishes to the point that stuffing the equivalent of 100 Gems to get a level 5 Gem isn’t better than just making two level 3 Gems. No one is going to go for high level gems, other than for pure achievement.
I personally really did not like the fact you lost a level when extracting a Gem. As I said before, this discourages trying things out since you have to be dead sure you want “x” gem on “x” weapon, lest you waste a level 5 gem on a small sword.
Losing gems upon death is an “ehh” topic for me. It’s great for deterring players from risking high level gems in dungeons, but it has no effect on mitigating death in fields and can rather be prevented by sticking gems in storage or in empty slots of old weapons. I could talk about other kinds of penalties that could happen on death, but that’s a different topic.