Yes, the £10 you buy can go either way, keep it is credit or use it to buy a £10 goodybag.
You may be able to buy a £10 goodybag straight away without needing to go as credit first then purchase the goodybag, but don't take my word for it.
I'm not too sure that's possible, actually?
don't think it was when I activated.
Unfortunately you are unable to purchase a goodybag until your SIM is activated, so initially the only option available is to Buy credit (Buy goodybag and Buy both are greyed out and unselectable). However as others have said, once your SIM is activated and your balance is correctly showing in My giffgaff you can go back to the Top-up page and select Buy goodybag and then choose to use your existing balance to purchase it.
I would echo what peeter said though - it is a good idea to leave an extra (say) £5 as your PAYG balance to cover any MMS, calls to 0870/0845 etc., or any calls you might need to make if you use up all your goodybag minutes for the month. Remember the next goodybag can only take effect once the previous one has run its full month - you can't replace a goodybag early just because you've used up all the minutes.