I believe that during the height of the Gulag, local jails were mainly used as interrogation and storage facilities for people who would eventually end up in the camps. Certainly the camps held both those convicted of political and criminal offences.

I can recommend both Anne Applebaum's excellent "Gulag - A History" and, of course, Solzhenitsyn's incredible "Gulag Archipelago":

http://www.anneapplebaum.com/gulag-a-history/

http://en.wikipedia.org/wiki/The_Gulag_Archipelago