Always was interested in this type of question, but for now I'll take the theist side.

It could be argued that as long as there is a god, evil has to reside in some form. Ying Yang, balance between good and evil, whatever fits your fancy. For god to claim something is good, he has to have a comparision. And since initially there was nothing, and you cannot compare something with nothing, he would of had to incorporate the evil into his creation for it to have any ability to distingusih good. Even an omnipotent being cannot judge something if there is nothing to judge it against. Then it's opinion. And said God should, in theory, have no opinion.

Or maybe the balance in the world between good and evil is what makes it 'good'. No domination of one side over another, just an overall neutral world which promotes the free will which God supports. That could be what makes the world 'good'.

Or maybe God himself is the evil one in the equation, who creates a parallel to himself to fuel his evil, maintain his evil. A person cannot be a hero without a villain to contrast him and viceversa. Or God could be the good one in the equation, and the world is what balances the equation out.