The designation of Adam in Gensis 2 as being made in G-d's image refers to the fact that Adam, alone in creation, had free will-- and a mind to use that free will.
The souless men, by this theory, survived until the Flood-- interbreeding with Adam's line to create the Nefillim (Giants) .
The way it was covered in one of my theology courses (fun part was the Rabbi who was a co-professor during the Old Testament) is that there were three oral traditions that were written down at different times - Judaic, Priestly, and Essene, I believe. The version of the the creation which has man in the middle was written during time the Hebrews were enslaved by the Babylonians and the version with man in dominion was written when the Hebrews had established their kingdom and were a power in the region. So, each version had a point, one to reassure slaves and one to justify their power. He also presented versions of Genesis that had all three creation stories.