Summary: Following our previous work [B. Pozsgay et al., “Correlations after quantum quenches in the XXZ spin chain: failure of the generalized Gibbs ensemble”, Phys. Rev. Lett. 113, Article ID 117203, 5 p. (2014)] we present here a detailed comparison of the quench action approach and the predictions of the generalized Gibbs ensemble, with the result that while the quench action formalism correctly captures the steady state, the GGE does not give a correct description of local short-distance correlation functions. We extend our studies to include another initial state, the so-called q-dimer state. We present important details of our construction, including new results concerning exact overlaps for the dimer and q-dimer states, and we also give an exact solution of the quench-action-based overlap-TBA for the q-dimer. Furthermore, we extend our computations to include the xx spin correlations besides the zz correlations treated previously, and give a detailed discussion of the underlying reasons for the failure of the GGE, especially in the light of new developments.