Some of you know about the Problem of Evil already, but here's a short description for those who don't. In a nutshell, it's a philosophical or theological objection to the existence of evil in a world governed by a loving and omnipotent God. In a smaller nutshell, it's the question, "Why does God allow evil?"
Now, a lot of people have wrangled over this issue for a long time, and I don't expect my solution to end the debate...or even be original. I only dabble in philosophy, after all. But before I present my solution, I want to define the problem a little more explicitly. The Problem of Evil requires that you postulate four things (at least):
1. This seems to be a no-brainer, but I include it for completeness. It's possible, after all, that there is an objective definition of true evil, and that nothing meets that definition. What we think of as evil is not really evil, just unpleasant (i.e. a murderer is no more evil than a hurricane).
2. You don't need a specific religion here, just accepting that there is (absent postulate 3 and 4) some entity that could reasonably be considered to be godlike. Someone whose skillset includes the ability to create a universe, to borrow from the Daily Show.
3. God need not be omnipotent for there to be a Problem of Evil, but He1 should definitely be powerful enough to stop evil. If He isn't powerful enough, then there is no Problem of Evil...God is trying as hard as He can, we see what gets past Him.
4. Crom doesn't love you. If Crom is the only god, then there is no problem of evil...Crom doesn't care if you suffer. In fact, he expects you to suffer. Your view of God must include postulate 4 if there is to be a Problem of Evil...God has to care enough that you'd think He'd try to stop evil.
So...how can one reconcile these seemingly contradictory postulates? Why does God allow there to be evil when He loves us and could shield us from it? Why does He allow temptation, allow us to stray?
The key, in my mind, is free will. While there are certainly deterministic flavors of the religions that fit our postulates, it's hard to have a Problem of Evil when God dictates our every move. And most Christian-derived faiths accept that God gave us free will as one of His gifts to us.
I propose that free will is, in fact, the greatest of God's gifts. The one which He will sacrifice anything to preserve. Think about it: God does not interpose His hand when one person tries to kill another. Our ability to choose our own paths supercedes the value of life itself2. He loves us, but He considers our free will to be the greatest attribute we possess. Greater than life. Greater than happiness. Greater than love, than beauty, than faith.
And free will leads to evil. If we can choose to be good or evil, someone will eventually choose evil. And the only way to stop this is to deny us our free will (or arrange events so carefully that we're funneled into choices, which is functionally the same thing). God loves us too much to take away our greatest gift, and so He allows us to suffer the loss of lesser gifts.
As a corollary to that, the greatest evil that man can commit would thus be the one thing even God will not do: deprive someone of their free will, or convince that person that they do not have free will. I'm not talking physical imprisonment here, or giving them a choice that is no choice at all (i.e. obey or die). Even in those situations, you are free to make decisions, even if they're really BAD decisions. But when you convince someone that they have no will of their own, that they are merely an extention of your will (or God's will, through you), that is the greatest evil of all.
And if you decide on your own that everything is planned out for you and you have no choice? That's worse than suicide. It's one thing to believe that God knows everything you will do (being omniscient and all that), but quite another to believe that He has already made all your decisions for you. By throwing away your free will, you abandon the only thing that makes the existence of evil worthwhile.
2 This is not to say God does not value life. Simply that He will judge us later for any sins against life, rather than intervene and deprive us of choice.