Is God incapable of avoiding the creation of bad people?

Tread carefully on this one, religious folks. Remember: your God is supposed to be omnipotent. He can do anything (except evidence Himself to so many non-believers). He's also omniscient. Such a Being could easily create only good people who would not abuse their free wills. Why doesn't He? Not only would that mean that nobody had to go to Hell, but it would also presumably make life on Earth a lot less troublesome.