You can use ten of the same gemstone, plus 20 Meteorite Bars, to craft a phaseblade. All phaseblades are identical except for color, which is based on the color of the gemstone. You only need ten total gemstones, all of one type. You do not need ten of each.
As of 1.05, they have other uses! Six to ten each of two gemstones are required to craft Jungle Armor set pieces. You will need ten emeralds and sapphires, eight amethysts and topaz, and six rubies and diamonds. (for a total of 48 gemstones.) Additionally, rubies are used to create the Robe and Gold Crown, while topaz are used to create the Sandgun. (Source: http://wiki.terrariaonline.com/)
As of 1.1, each of the gemstones can be combined with 3 torches to produce 3 colored torches (shows off Terraria's new lighting engine!).
As of 1.2, each of the gemstones has an associated ore that it can be crafted with to create a "___ Rod" item, which is a rod made out of 15 of your gemstones and 10 bars of a particular ore. The Diamond and Ruby rods are First-and-second best, and use Platinum and Gold bars respectively.
All gemstones can now also be used to craft new grappling hooks that don't require a Hook to create, making them ideal for new characters. The Ruby and Diamond hooks also have a longer reach than the Ivy Whip.
In addition, these gems can be used to create Large Gems for the Capture-The-Flag game, so it would be wise to hold onto some in case you ever wish to host said game for some of your friends.
It sounds like you have the right idea, but here's some tips or suggestions. Buff potions definitely help, and also you will want to make sure you are using the Greater Health Potions, not the lesser ones of course.
If you haven't done so already, I suggest you try making a very long bridge. It doesn't have to be completely flat but at least enough that it's very easily traverse-able and you won't get stuck somewhere by accident or fall into lava. You'll want to focus more on the battle than trying to get around down there.
My weapon of choice for this battle would be one of the flails (Or any big Sword such as Night's Edge) for the numerous mini enemies attached to the wall. Flails take them out easily and quite efficiently since you can hit almost all of them at once. Once those are all done for, this is when switching to the minishark is a good idea. It puts out lots of damage very quickly, obviously, plus the bonus ability to save ammo every-time you shoot it. If you have the Goblin Tinkerer I suggest you put some money in reforging weapons for better stats, not necessary but makes a very noticeable impact when you get a good one.
As for your accessories, you might want rocket/specter boots to get around easier; a cobalt/obsidian shield so you aren't knocked around or into lava, and also in case there any exposed hellstone you could accidentally walk onto; and a Band of Regeneration to quickly recover lost HP. The other two are up to your preference really. I would also suggest reforging these to try and get the Warding prefix (+4 defense). Again not necessary but it will help tremendously in the long run. Especially since having 5 warding accessories means +20 defense.
You can also try to focus on magic items to defeat it. A Vilethorn also makes quick work of the smaller enemies while a space gun (with full meteor armor) will constantly damage the actual Wall without ever using mana. A Demon Scythe is definitely my favorite weapon to use against it though. It will hit everything it passes through, and while it's "charging up", the boss can be directly over it getting hit 3-5 times guaranteed. The only problem is how hard is can sometimes be to find.
If you do decide to use magic items make sure you have a full 200 Max Mana and some Mana potions as well. Restoration potions can also help here as they give back both mana and HP but will give the "Potion Sickness" debuff on use, unlike regular Mana potions. You can also get a Mana Flower to equip. This will automatically use mana potions for you so that you won't have to worry about how much mana you currently have.
Once you do manage to defeat it the first time, beating it again will just get easier since you will have access to higher tier items.
Best Answer
I believe 400 health is max, 20 health per heart and start with 100 health, so 15 crystal hearts.
Source: Wiki
EDIT: This is current as of v1.0.4
EDIT2: It should be noted that max mana is 200, or 10 mana crystals.