Here's an interesting quote on the subject of theodicy from Bruce Sanguin, from his book Darwin, Divinity, and the Dance of the Cosmos:
I believe that God is present to us, even in the midst of evil and suffering, but it requires some theological updating to see how and where.
First, let go of omnipotence as a divine characteristic. God is not "up there," like a cosmic puppeteer, pulling all the strings. God is not all-powerful, at least not in the way we normally think of power. God's power is the non-coercive, alluring power of love. While some things are absolutely evil, evil is not ultimate. Evil needs to be set within the larger arc of the universe story and the gospel narrative. Both stories witness to an inexorable evolutionary movement, from simplicity to complexity, disorder to coherence, instinct to increasing levels of conscious awareness, selfishness to compassionate concern. This movement occurs through a love that orients all creation toward God's own heart, and enfolds even the worst atrocity into that same encompassing heart.
Second, remember Paul's insight that God's heart was on display in the "servanthood" of Jesus of Nazareth (Phillipians 2). Specifically, the incarnation represents a "kenotic" or self-emptying process, whereby God continually makes room for others and for their evolutionary development. As a result, there is genuine freedom and novelty in creation. Genetic dead ends and natural disasters will occur, as all levels of creation find their own way. Empires, tyrants, and hearts filled with hate express one cost of the divine gift of freedom. As the Holy One makes room, we may choose to fill up the space with unbridled greed and lust for power. God doesn't unilaterally intervene on these occasions, because it is not in God's nature to do so. On the other hand, God is always present, offering love to hearts that are closed.
Third, the theology of the cross affirms that God was present on the cross. This was considered foolishness by the religions of the day. A God who suffers and dies! Get serious! But it's only preposterous if we insist on clinging to a God who exercises coercive power. The God of the gospels deals with suffering by entering into it. The presence of the divine in suffering is not limited to the occasion of the crucifixion. It extends throughout the 14-billion-year story of creation. For Christians, this pan-cosmic, suffering presence of the divine is symbolized by the crucifixion. (pp. 237-239)