The Diamond is cyan-whiteish colored, and the rarest gemstone available.
A fast way to find Diamonds is to use the Spelunker Potion, which makes underground ores and gems shine. Another fast, yet foolish way, is to have bottles of Holy Water/Unholy Water or the Clentaminator and throw them in the area you are spleunking in. Gems will not change to Pearlstone or the other types of stone when in a biome. Although almost always seen underground, like other gems, there is a possibility that it may spawn in the overworld.
White Torches are sometimes used as a statement of wealth. This is due to the rarity of diamonds, which are required to craft them.
The selling price of Diamonds, at 30 each, does not reflect their actual value. Selling Diamonds is very unprofitable.