Evil and the God of Love?

In our flat (and various other places) this week, we have been discussing the question of Evil. Whether God created evil, or allows it? It seems such a huge question, and everyone we have spoken to has been massively challenged or overwhelmed by the enormity of it .
Revelation 4:11 says "You are worthy, our Lord and God, to recieve glory and honour and power, for you created all things, and by your will they were created and have their being."
So I know that, yes, in fact God created ALL things. So evil was also created by him. Something in that doesn't seem to fit. And that raises the issue of theodicy. What kind of God are we believing in? A God of LOVE. One that does everything for us, and gave everything to set us free from the bonds of sin. SO why would a God of Love create evil? Are we too romantic in our idea of God? Do we see it as a story that will obviously end with a hollywood flourish? A fairytale, mushy, lovely God who wouldn't do anything to cause harm?

The truth is, I just don't know. I'm swamped by the enormity of the idea. It challenges my perception of God on a massive scale, and I don't quite know where i'm going with it. In everyway it would seem so much simpler to just say that God allows evil, and to keep our happy little bubble from bursting, but that doesn't seem to sit right with at the moment, and its just not enough for me. Anyway, i'm going to stop blabbing cause if not i'll go on for ages, and end up in the same place. If you have any words of wisdom, or want to talk about it, please let me know. :)