From The Church of Jesus Christ of Latter-day Saint's perspective, since man's intelligence was not created or made and neither indeed can be, God would not have the ability to make man perfect from an intellectual and moral stand point since God could not create mankind's intelligence.
Doctrine and Covenants 93:29
29 Man was also in the beginning with God. Intelligence, or the light of truth, was not created or made, neither indeed can be.
This would mean that God would not have the power to create the intelligence of mankind since it is self-existing and each intelligence would be in the state it exists in at any given time in its infinite existence. This would mean that God would have to bring man up to become perfect in another way than simply creating man to be perfect. So how does God get mankind to progress to become more perfect if He could not simply create them to be perfect? God must give mankind teachings and experience to learn to become more perfect. So God creates a temporal (temporary) existence where mankind can come to a world and experience good and evil and by learning to choose of his own free will and choice to be a good being, man can progress to become more like God himself. Giving mankind a free will and allowing him to choose between good and evil is going to bring about evil in the world with mankind being in an imperfect state. Thank goodness its a temporary existence and that God is over all. From evil choices by mankind, and being subject unto pain, suffering and death suffering exists. But if God did not allow imperfect mankind to have free will, but forced mankind to be good, would mankind really be good in and of themselves? NO! Free will is critical from mankind to become a good being in and of oneself!
So having free will is critical and since mankind is imperfect in their state as self-existing beings, then naturally bad decisions are going to be made. But a loving God teaches his children correct principals of loving each other and how to conduct oneself to minimize suffering. He also provides a Savior to allow mankind to repent of his sins and be forgiven. In this way mankind can progress toward perfection and eventually learn to choose good over evil. By experiencing a temporary state of suffering and death, mankind learns to love and appreciate in the eternal scheme of things the good principals of existence and immortality and eternal life. This mortal life is a school ground for man to learn good and evil and to learn what death and suffering are. However, they can contrast those things with the good and happiness and joy of this mortal life. Through this progression, mankind can become a great appreciator of good and overcome evil and become a better being. Through Jesus Christ and the resurrection we come out of this temporary mortal existence and gain immortality to never die again. If we have learned to choose good over evil to a very, very high degree and are willing to abide by all the laws of God's kingdom, we are allowed to live in the kingdom of heaven in the hereafter. If we are not willing to abide by the law of God's kingdom, God places us into lower kingdoms where we are willing to abide by the laws of those lower kingdoms.
So the reason God allows suffering in this temporary world is so that our self-existent intelligence can progress to understand good from evil and to learn to choose good over evil and become better beings. Since God cannot use force and has to use free will to help us choose goodness over evil of our own free will and choice to become good beings, much of the suffering in this life is due to mankind making bad decisions. However, we can learn from these things and improve our lot in this temporal existence. Thank God this life is only temporary and is for our progress and learning. In the hereafter we will have immortality and death, sickness and other mortal frailties will not exist. However, the degree of our joy and happiness will still depend on the degree we are willing to live the laws of joy and happiness. Those who are not willing to abide by a celestial law should not be allowed among those who are willing to abide by that law or it would not be a heaven. Thus having separate kingdoms is a good idea to allow everyone to live among those who are like themselves and willing to abide by the same law.
The idea that God is all powerful does not mean that God can do absolutely anything imaginable but that God is able to do all that is possible to do. Mankind does not possess the knowledge of all that is possible. There are things that are infinitely impossible even for God. I believe God has revealed that the intelligence of man was not created or made and neither indeed can be. Thus mankind could not be created perfect since God could not create man's intelligence. I also do not believe that God ever creates anything from absolutely nothing. This is the doctrine of The Church of Jesus Christ of Latter-day Saints.
