God creates us with a free will. God is omniscient. He knows before we are created by Him how we will exercise our 'free will'. Therefore He knows which of us will reject Him and, by this standard, be condemned to an eternity of suffering. Why would a loving, omniscient God create a soul that He knows before its creation will, after a cosmic blink-of-the-eye called life, be consigned to hell?
There have been numerous (to say the least) posts on that very subject. Use keyword Calvinist or Arminian and you may find them.
My take is that when God delegates responsiblity by conferring free will (don't dare suggest that to a Calvinist), then God deliberatly doesn't peek ahead at the outcome. It just stands to reason. How else do you explain the NUMEROUS instances of God being disappointed with people throughtout the Bible. You can't be disappointed if you really expected the outcome.
In summary, God can know all but doesn't always choose to know all.
I think the bumper-sticker has a good idea: "Some people are here to be examples to the rest...".
http://www.leaderu.com/offices/billcraig/docs/craig-bradley0.html
Good debate on the subject if you ask me. Dr. Craig touches on some of the things you bring up.
Job asked questions like that. That's all the answer you will get.
The only two things which hint at the "answer" here are these:
1) Paul, in Romans 9, raises the (obvious) question of whether God is the author of evil. His answer is brief, pithy, and not exhaustive. It is simply "If this were so, how could such a morally confused being judge the world?" Well..., ok, but not really what we had in mind, ya know.
2) Christ's agony in the garden, where he recognized evil (portrayed as "the cup" he was about to "drink") as being horrid, foreign, external to his nature and totally repugnant, and then the tortured scream on the cross "MY GOD MY GOD, WHY HAVE YOU FORSAKEN ME?" as he took evil into himself and experienced the hatred, rage, and blistering deluge of the wrath of God for evil. Those truths about Christ do not answer the "idle speculation" about God and evil, but they are enough for me to say "ok, I get it. It ain't from you and you don't have any truck with it."
Odder still, is that we are, apparently, his second attempt at creating organisms that have the sole purpose of worshiping him (the first attempt ended in a war-- in heaven, of all places-- and the banishment of a third of the citizens of that created society). You would think he would have learned his lesson, but he did the same exact thing again with the exact same result-- betrayal by his subjects. God gets an "F" in creation, unless he's graded on a curve or something.
"Free will" and an omniscient God are a contradiction.
We do have free will, although we also are influenced by our genetic programming (instincts) and environmental influences (peer pressure, advertising, etc.).
God cannot be omniscient. God cannot exist.
Bob J said it correctly in his post: "Only a child believes in hell."
Great question. I found this helpful.
St. Thomas also provides explanations of what are now generally considered to be the two main difficulties of the subject, viz., the Divine permission of foreseen moral evil, and the question finally arriving thence, why God choose to create anything at all. First, it is asked why God, foreseeing that his creatures would use the gift of free will for their own injury, did not either abstain from creating them, or in some way safeguard their free will from misuse, or else deny them the gift altogether? St. Thomas replies (C. G., II, xxviii) that God cannot change His mind, since the Divine will is free from the defect of weakness or mutability. Such mutability would, it should be remarked, be a defect in the Divine nature (and therefore impossible), because if God's purpose were made dependent on the foreseen free act of any creature, God would thereby sacrifice His own freedom, and would submit Himself to His creatures, thus abdicating His essential supremacy--a thing which is, of course, utterly inconceivable. Secondly, to the question why God should have chosen to create, when creation was in no way needful for His own perfection, St. Thomas answers that God's object in creating is Himself; He creates in order to manifest his own goodness, power, and wisdom, and is pleased with that reflection or similitude of Himself in which the goodness of creation consists. God's pleasure is the one supremely perfect motive for action, alike in God Himself and in His creatures; not because of any need, or inherent necessity, in the Divine nature (C. G., I, xxviii; II, xxiii), but because God is the source, centre, and object, of all existence. (I, Q. 65:a. 2; cf. Proverbs 26 and Conc. Vat., can. 1:v; Const. Dogm., 1.) This is accordingly the sufficient reason for the existence of the universe, and even for the suffering which moral evil has introduced into it. God has not made the world primarily for man's good, but for His own pleasure; good for man lies in conforming himself to the supreme purpose of creation, and evil in departing from it (C.G., III, xvii, cxliv). It may further be understood from St. Thomas, that in the diversity of metaphysical evil, in which the perfection of the universe as a whole is embodied, God may see a certain similitude of His own threefold unity (cf. I, Q. xii); and again, that by permitting moral evil to exist He has provided a sphere for the manifestation of one aspect of His essential justice (cf. I, Q. lxv, a. 2; and I, Q. xxi, a. 1, 3).It is obviously impossible to suggest a reason why this universe in particular should have been created rather than another; since we are necessarily incapable of forming an idea of any other universe than this. Similarly, we are unable to imagine why God chose to manifest Himself by the way of creation, instead of, or in addition to, the other ways, whatever they may be, by which He has, or may have, attained the same end. We reach here the utmost limit of speculation; and our inability to conceive the ultimate reason for creation (as distinct from its direct motive) is paralleled, at a much earlier stage of the enquire, by the inability of the non-creationist schools of thought to assign any ultimate cause for the existence of the order of nature. It will be observed that St. Thomas's account of evil is a true Theodicy, taking into consideration as it does every factor of the problem, and leaving unsolved only the mystery of creation, before which all schools of thought are equally helpless. It is as impossible to know, in the fullest sense, why this world was made as to know how it was made; but St. Thomas has at least shown that the acts of the Creator admit of complete logical justification, notwithstanding the mystery in which, for human intelligence, they can never wholly cease to be involved. On Catholic principles, the amelioration of moral evil and its consequent suffering can only take place by means of individual reformation, and not so much through increase of knowledge as through stimulation or re-direction of the will. But since all methods of social improvement that have any value must necessarily represent a nearer approach to conformity with Divine laws they are welcomed and furthered by the Church, as tending, at least indirectly, to accomplish the purpose for which she exists.