You're right when you say God knows everything -- and yes, He even knew that Adam and Eve would give in to Satan's temptation and rebel against Him. God warned them in advance what would happen -- but they did it anyway.
Why, then, did God create us? The Bible doesn't give us a detailed answer -- but it does tell us that love is at the very center of God's nature. "God is love," the Bible says (1 John 4:16). But God's love needed to be expressed, and so He created individuals He could love -- and who could love Him in return. The Bible says, "This is love: not that we loved God, but that he loved us" (1 John 4:10).
We weren't meant to be puppets or cold lumps of clay; God put within us the capacity to love Him. But something went wrong -- and that "something" was sin. Instead of loving God, we loved only ourselves. Instead of freely serving God, we became slaves to our own lusts and desires. Our relationship with God was broken, and death entered our lives.
But here is the remarkable thing: God still loved us -- and He still loves us! He loves us so much that even before we were created, He planned to send His Son into the world to bring us back to Himself (see 1 Peter 1:20). Do you know Him? Open your heart and life to Jesus Christ, and discover the joy of knowing God personally -- both today, and forever.