If i soultrap someone and drop the gem in the sea, does that mean their soul is trapped inside that gem and doomed to be trapped in it for all eternity? Or is it just their energy and/or life-force?
That seems to differ between Morrowind and previous games and Oblivion. In Morrowind enchanted items would recharge overtime, suggesting that there was something that collected Magicka, presumably the soul. In Oblivion on the otherhand there is no such recharging and souls come only in 5 discrete levels of power so it would appear that it's just their energy.
In Redgaurd the Souls of Prince Ator is trapped to preserve his body and N'Gasta's soulsnare captures the souls of people. This suggests that it is the soul and not just energy.
I'd have to look it up how it worked in Arena and Daggerfall.
Of course this is mostly gameplay so it doesn't relate much to lore, from the story stuff the suggestion that you're actually trapping souls. So when you trap somebodies and drop the gem into the sea they're screwed. You can find a good example of this in the Story of Redgaurd.