P.S.
Your answer (3) is also a valid one. The simplest answer to the great theological problems of pain and suffering is:
1. There isn't any God
2. Shit happens.
The human brain has a distinct abhorrence of chaos wired into it. It is almost impossible for humans not to impose patterns and order on existence*, and it would not be surprising that this would form a basis for most religions. Sophisticated modern atheists with feng shui mirrors hanging on their wall should not be too smug.
*Might be why authoritarianism seems to be so appealing compared to non-centralized, libertarian systems. God knows there's a lot more of the former in our history than the latter. That and the baboon-gene need for kings and followers.