Good point about converting gaols in the city (7)
I believe the answer is:
glasgow
'city' is the definition.
(Glasgow is an example)
'good point about converting gaols' is the wordplay.
'good' becomes 'g' (abbreviation).
'point' becomes 'w' (W is an example**).
'about' means one lot of letters goes inside another.
'converting' is an anagram indicator.
'g'+'w'='gw'
'gaols' anagrammed gives 'lasgo'.
'gw' going around 'lasgo' is 'GLASGOW'.
'in the' acts as a link.
(Other definitions for glasgow that I've seen before include "City of bad low gags" , "Scottish city on the Clyde" , "Scottish metropolis" , "Scots city" , "Scotland's largest city" .)