Since God is all-knowing, all-powerful, and perfect to boot it stands to reason he could create a world without suffering.
You're wondering why god doesn't make the world a happier place for everyone (to rephrase it slightly).
Think of god as similar to a parent. Parents want their children to be happy, right? And what makes children happy? Toys and candy! Therefore, a good parent should give their child all the toys and candy they want ... right?
Obviously, if a parent raises their child like that, their child with be sick and spoiled rotten. So the best option for the child might not be the option the child wants the most.
Heck, parents even subject their kids to quite a bit of suffering (school, dental appointments, braces), but in the long run it works out best for the kids.
And even once you become an adult, the unpleasant things you go through are still some of the experiences that lead to the most personal growth.
He also created Hell, a place of eternal torment and suffering. If God is not Saddistic why would he create a place like Hell?
Everybody is so certain what heaven and hell are like, but I have not met
one person who has actually been there and come back to verify it. (Okay, so Jesus did it, but he didn't exactly write Fodor's Guide to the Afterlife to tell us what we're in for.)
I'm not going to make assumptions about the nature of god based on uncorroborated accounts of what the afterlife
might be like.