The story of the making of man as the representative of God is described in the Holy Qur'an in Chapter 2 where Allah says, "And when thy Lord said to the angels: 'I am about to place a vicegerent (Khalifah, or Caliph) in the earth,' they said, 'Wilt Thou place therein such as cause disorder in it, and shed blood, while We glorify Thee with Thy praise and extol Thy holiness?' He answered, 'I know what you know not.' And He taught Adam all the names, then He put the objects of these names before the angels and said, 'Tell Me the names of these, if you are right. They said, 'Holy art Thou! No knowledge have we except what Thou hast taught us; surely, Thou art the All-Knowing, the Wise. He said, 'O Adam, tell them their names;' and when he had told them their names, He said, 'Did I not say to you, I know the secrets of the heavens and of the earth, and I know what you reveal and what you conceal? And remember the time when We said to the angels: 'Submit to Adam,' and they all submitted. But Iblis did not. He refused and was too proud; and he was of the disbelievers. [Holy Qur'an: Ch. 2, V. 31-35]
In another place in the Holy Qur'an the genesis of man has been succinctly stated as: "Remember when thy Lord said to the angels, 'I am about to create man from clay; And when I have fashioned him in perfection, and have breathed into him of My Spirit, fall ye down in submission to him. So, the angels submitted, all of them together. But Iblis did not. He behaved proudly and was of those who disbelieved." [Holy Qur'an: Chapter 38, V. 72-75]
It must be noted that the angels described the then existing beings to be the cause of disorder and bloodshed. They wondered how such a wild creation could represent God. But God had a plan that was unknown to the angels as depicted above. He was about to bring man to physical and mental perfection and then to breath in him His spirit -- consciousness. Man became a thinking being. He was, at this stage, impregnated with soul -- the self that could distinguish between good and evil, and feel shame and remorse at committing evil, and strive to achieve eternal life through God's mercy. Man's soul could resonate with the word of God. He could reflect God's image in his own being. His previous state before this reckoning is metaphorically likened to wet, moldable clay. The best among those perfected souls was Adam, the first prophet of Allah to his people. They were transformed from a rowdy, disorganized, marauding, savage bunch of proto-humans to God-conscious, loving and peaceful human beings.
Both of these stories clearly show that man was endowed with a soul that could enable him to excel angels in representing the attributes of Allah. Therefore, angels were made subservient to such perfected humans in order to extol perfect glory of Allah. The choice between good and evil given to humans is depicted in the allegory above in the character of Iblis, who, out of his pessimistic attitude (Iblis means the one who despairs) and inferiority complex, decided to show haughtiness and derision and took to the path of evil. Such beings who followed in Iblis' footsteps remained in their previous state of ignorance and backwardness and therefore were doomed to fail in a world ruled by the survival of the fittest.