God created things out of His love. He is Perfection Himself therefore He wasn't bound to create. He is perfectly happy without finding anything necessary to make Him happy, but He is also Love, He wills it that there should be things beside Himself that can share His happiness & thus the creation began (if you love somebody then it's only natural that you should want him/her to share in your happiness; in the case of God, there had been nobody beside Himself to share in His happiness, therefore He created things).
God didn't create evil. Evil is a negative entity, that is it doesn't exist in itself, but it is the lack or absence of goodness just as darkness doesn't exist in itself, but it is the lack or absence of light. Since God Himself is Goodness, outside Him there's no goodness. It happens that God gives His creation free-will to choose to remain in Him (therefore in goodness, in truth, & happiness) or to walk out from Him (therefore to evil, to darkness, & unhappiness). Sadly the creation doesn't always choose to remain in Him & thus evil comes into being.
Mind you that the personal pronounce 'He' doesn't refer to God's gender! It's only a convention to refer to God as He since the English language as we know now is man-made.