The Cauchy spectrum node generates an index of refraction that changes based on the wavelength: https://en.wikipedia.org/wiki/Cauchy's_equation
For materials like glass, or gems, using a fixed index of refraction, like for example 1.5, independent on the wavelength, is non sufficient to simulate some effects such as dispersion. The Cauchy spectrum node generates an index of refraction that varies based on the wavelength according to the above Cauchy Equation, producing much more realistic results.
To change the color of the gem, the best way is to adjust the absorption of the dielectric medium. As light travels inside the gem, light is absorbed depending on this absorption parameter. So if you set the absorption parameter to blue, all the blue frequency of light will be absorbed, and the gem will look yellow, because none of the red and green frequencies will be absorbed. If you set the absorption parameter to black, the gem will look white, because none of the frequencies will be absorbed. Please also note that the absorption parameter is on dependent on the size of the gem, because the longer the distance the light travels inside the gem, the more light will be absorbed. For this reason, you might want to adjust the scale of the color parameter to values much bigger than one.
For the spectrum files, please refer to the reference in Help->View Help and look for the “Spectrum(spd)” files reference. There is a explanation with examples on how to create spd spectrum files. You can use the nodes created in this way as input for the absorption parameter of the dielectric medium. If you use measured data from real life crystals you will get very realistic results. You can find online the tabulated data for many common crystals, for example here: http://minerals.gps.caltech.edu/FILES/Visible/Index.html