Well, I'm not going to debate the science with you all, but I can offer some insight into the historical-theological questions. It took me a good while to compile this brief study (it's long, but not as these things go) so take what you can away from it. As you read, if you should become frustrated or thinking that I'm trying to destroy faith in the biblical text, please skip down to the conclusion at the end. That is not at all my intention, as you will see!
I reject a "literal" interpretation of creation for structio-literary and historico-exegetical reasons.
1. Structural-Literary: The Genesis 1-4 narratives appear to be structured thematically rather than anything else. Chapter 1 is semitic poetry: it has rhythm when you read it in the Hebrew (which this author does) and one can easily note how things are themed. Below is a little list which I've compiled (these are adaptations of what has been known for a long time. Language is from the NIV; italics are things I will note later on:
Day 1 Light and Darkness/Day and Night (vv.3-5)
--Day 4 Stars: separate day from night and markers for seasons; sun and moon: greater to govern day; lesser to govern night. (vv.14-19)
Day 2 Creation of expanse between the waters and naming it sky -- waters above and below (vv.6-8)
--Day 5 Creatures: in water and sky; great creatures [Hebrew תנים tanniym] of sea; all creatures of sea and all birds. (vv.20-23)
Day 3 Dry Ground; naming of "gathered waters"; vegetation; (vv.9-13)
--Day 6 Creatures: on land, living beasts, etc. Humans: to rule over the creatures of the land, sea, and air. (vv.24-31).
Structural-Literary Notes:
A. It is obvious that we have a literary structure. Each day is followed by a day in which something is made to inhabit and govern that sphere. Light and darkness are made, then those things which mark/govern/rule the light and darkness are made three days later. Thus the waters and sky are made, and then on the fifth day the waters and sky have creatures inhabiting them. The third day and the sixth day are likewise paralleled by sphere and creature, culminating in man which inhabits the earth, and rules it all.
B. It's also important to see the hymnic nature of the pericope. God says that he will do something, then he does it. This is a characteristic of oral story-telling (as is the structure under "A"); finally it is similar to ancient texts which recall how the kings made a statement. That is, the king would speak, and his word was authoritative: then he would do it or it would be done. It's an ancient idiom for how authority works.
C. Just to emphasize the oral nature of the story, please review it and see how repetitive it is; moreover the refrain of ויהי ערב ויהי בקר (vayahi 'erev vyahi boqer) "and there was evening and there was morning."
D. Finally, at 2:4 we have an interesting feature which many of you already know of. All throughout chapter one, the name for God is the generic name for God, from אל ('el which means "mighty"; the basis also for Arabic Allah), 'elohim. At 2:4, suddently, the name for God is יהוה אלהים (yhvh 'elohim) "The LORD God" and is using God's proper name, Yahweh. Moreover, notice that 2:4 claims to be the account of the heavens and the earth in their creation. It is a point when no shurb had yet popped up -- no plants, and it is said that man is required to work the ground (2:5). The fact there there were no plants requires, in terms of chapter one, a pre-day-3 time-frame. Yet this, in terms of chapter two, is where man is created. I think we must be dealing with two differing accounts of creation.
E. Finally, a note on ancient cosmology. If one consults ancient east-semitic and other cosmologies, one finds that they are surprisingly similar to what we find in Genesis. I cannot prove that this, or anything else I've stated above, means anything. All that it means is what I have shown: there are facts there, and I've tried not to interpret them for you. But what you should know is that stories like the Akk-Sumerian enuma elish myth are very similar.
2. Historico-Exegetical: One has to take any piece of literature, sacred or not, within the context of its original authorship and its language. That is, a word means what a word means within that specific culture. Because we have the Hebrew bible, we can learn a lot about a word based upon its usage elsewhere. Most of the words I'm citing below are from the Genesis 1 pericope:
A. expanse between the waters: KJV "firmament of heaven." The Hebrew is רקיע (raqiya'), a word which is used elsewhere to refer to the sky ("heavens"), as it is also named here in Genesis 1:8 -- שמים (shamayim). The meaning of raqiya' is significant, and the KJV translation firmament is telling that it is something solid, hard. To my knowledge it only occurs in 15 verses, seven of which are in Genesis 1. The others are: Psalm 19:1; 150:1; Ezekiel 1:22,23,25,26; 10:1; and Daniel 12:3. In Ezekiel 1:22 the raqiya' glimmers like ice; above the expanse is the throne of God (vv. 25-26).
B. waters above and below: Literally the Hebrew reads in 1:7, and God made the expanse and he separated between the waters which were below the firmament and between the waters which were on top of the firmament -- and so it was. I am no scientist, and I'm not going to talk to you about vapor pressure: what I know is that this was a common belief in the ancient world. They did not simply believe that there were clouds above the sky (obviously we know they're in the sky, but that wasn't the ancient idea) -- they wrote that there was a sea above the heavens in which the rain and such were stored. The firmament was a dome stretched over the earth (the Egyptians pictured a woman or a falcon) upon which the stars glided and the waters were hid (hence the blueness). Finally, under the earth there was more water -- the chaos waters. More about that later.
-->The following scriptures all evidence the same idea, they have taken me a while to compile. Unfortunately they're not in english OT order; they're a composite of Hebrew order, but you can still find them useful. First I'm going to elucidate the biblical cosmology, then quote a few verses, then move on (finally): Genesis 1:1-2; 7:11; Genesis 8:2!; 49:25; Dt. 4.18; 5.8; 33:13; 2Sam 5:20=1Chron 14.11; Job 26:5; Job 37:10; Job 7:12; 38:16; Ps. 24:2; Psalm 74:13; Ps. 136:6; 148:4; Proverbs 8:29; Isaiah 44:27; Jeremiah 10:13!!=51:16; Amos 5:8; Lam. 3:54=?Jonah 2:1ff.
-->The ancient cosmology consists of the deep, the waters of chaos which, in Gen 1:1-2, were all that was of the earth. God ordered this chaos, separating and distinguishing and naming in His creation. He created a firmament to separate the waters, so that some were above the heavens (already noted as a dome) and some were below. He then gathered the land and built that, separating it from the waters, but still leaving waters under the land -- the sources of springs and streams. The sea and the "deep" continued to be a picture of chaos and disorder and at times, evil and distress throughout Hebrew writing.
-->ALL EMPHASES MINE. On the heavens being a dome covering the earth, see Jer. 10:12: But God made the earth by his power; he founded the world by his wisdom and stretched out the heavens by his understanding.
-->Genesis 8:2: Now the springs of the deep and the floodgates of the heavens had been closed, and the rain had stopped falling from the sky. "Floodgates of the heavens" = "rains" -- quite a picture. Rain comes through the floodgates from the stores of the waters above the heavens (the solid FIRMament).
-->Jonah 2:5-6: he engulfing waters threatened me, the deep surrounded me; seaweed was wrapped around my head. To the roots of the mountains I sank down; the earth beneath barred me in for ever. But you brought my life up from the pit, O LORD my God. This appears to be a picture of the earth held up upon the waters on columns, almost like stilts. This same idea of the earth on top of the waters is in Psalm 24:1b-2: The earth is the LORDs, and everything in it, the world, and all who live in it; for he founded it upon the seas and established it upon the waters and also in Ps. 136:6 who spread out the earth upon the waters, His love endures for ever.
-->Waters are continually pictured as "below" us; an example is Dt. 33:13: About Joseph he said: "May the LORD bless his land with the precious dew from heaven above and with the deep waters that lie below.
-->Again, the waters above: Praise him, you highest heavens and you waters above the skies. Also, Jer. 10:13(=51:16): When he thunders, the waters in the heavens roar; he makes clouds rise from the ends of the earth. He sends lightning with the rain and brings out the wind from his storehouses.
-->In conclusion of this point, let me just remind the reader that we have similar cosmologies in both east and west semitic cultures, as well as in Egypt of all places! When we see this language in the bible, it is very similar language to that of the other ancient peoples so we have corroborating evidence about the general idea of what is meant.
C. great creatures: As noted above under day five of Gen. 1, the Hebrew word for this is תנים, tanniy[m/n]. It's a significant word for this study and has to do with some interesting points about creation. The Hebrew occurs in 28 verses and is often translated snake (such as in Exodus about Aaron's staff: 7:9,10,12). It is also translated by "dragon" in Nehemiah 2:13 by the KJV and JPS. Reversing my tactic last time, this time I'll cite pertinent verses first, then explain how I think it all fits togther:
-->Job 7:12 Am I the sea, or the monster of the deep, that you put me under guard? Notice that "sea" and tanniyn are equated as the same thing here (synonymous parallelism).
-->Psalm 74:13-14 It was you who split open the sea by your power; you broke the heads of the monster in the waters. It was you who crushed the heads of Leviathan and gave him as food to the creatures of the desert. Here the Hebrew begins emphatically with the predicate, "you who did this," referencing the defeat of the _ancient_ sea monster. Also notice well the plural, and that he was fed to creatures in the desert. These things are all important for the discussion below.
-->Isaiah 27:1 In that day, the LORD will punish with his sword, his fierce, great and powerful sword, Leviathan the gliding serpent, Leviathan the coiling serpent; he will slay the monster of the sea. Again, Leviathan is called the sea monster, a serpant, and is defeated by the LORD (Yahweh).
-->Isaiah 51:9-10 Awake, awake! Clothe yourself with strength, O arm of the LORD; awake, as in days gone by, as in generations of old. Was it not you who cut Rahab to pieces, who pierced that monster through? Was it not you who dried up the sea, the waters of the great deep, who made a road in the depths of the sea so that the redeemed might cross over? It is not coincidence that here Rahab, which means "storm" or "arrogance," is equated with the "monster", and then is referenced to the sea and the exit from Egypt! Rahab was a kind of code-name for Egypt applied by the Hebrews (cf. Ps. 87.4) and so the beautiful picture here is of the sea monster being killed as the Israelites cross the Reed Sea out of Egypt: the mingling of so many idioms and mixing metaphors was a wonderful ancient Hebrew poetic tactic.
-->Ezekiel 32:2(& cf. 29:1-3) Son of man, take up a lament concerning Pharaoh king of Egypt and say to him: "You are like a lion among the nations; you are like a monster in the seas thrashing about in your streams, churning the water with your feet and muddying the streams. Both the ESV and JPS translate "dragon" instead of "monster." Interesting.
-->The description of Leviathan in Job 41:1ff, esp. 41:18-20: His snorting throws out flashes of light; his eyes are like the rays of dawn. Firebrands stream from his mouth; sparks of fire shoot out. Smoke pours from his nostrils as from a boiling pot over a fire of reeds. and v.27: Iron he treats like straw and bronze like rotten wood and v.31: He makes the depths churn like a boiling cauldron and stirs up the sea like a pot of ointment.
-->The Leviathan and Tanniym are not purely a biblical phenomenon. This creature is known in other ancient literatures as Tiamat or yam; the latter is the basis of the Hebrew word yam which means sea. In fact, in the literatures of Canaan and Mesopotamia, the chaos-seas are inhabited by a monster called "the sea" or "the deep" -- a personification of chaos and the deep. Whichever particular God is in charge comes along and "orders" the world by taking yam (usually a seven-headed serpent) and cutting her (always feminine, don't ask me why) in half. Half becomes the land, half becomes the chaotic seas which bear her name. In every culture the protagonist god seems to be different, and there are always little differences. In one, yam's blood is used to make man by Baal.
-->The Biblical Assertion is that it was God who defeated any primeval chaos monster. Why else would Psalm 74 be so emphatic, as if trying to show the Babylonians that it wasn't their gods but THE God, Yahweh, who has done anything.
3. Brief Conclusion:
If I might be permitted the briefest of interpretative comments (as indeed, I have kept my opinions to a minimum above), I would want to emphasize that I am in no way an athiest or an evolutionist. I am, however, aware that the Bible does not attempt to deal with things like cosmology. The Ancient concept is of a flat earth supported by columns over the deep, with the waters above which rain when the floodgates of heaven are opened. It is the defeat of chaos and the establishment of order in the universe that is the point of Genesis 1, and that point is mostly expressed in the thesis statement which sets this account against all the accounts of the rest of the ancient world: In the beginning, GOD created the heavens and the earth. Not, Baal; El, or the others. Only one, Yahweh, lord of heaven and earth, he created them by his own hand and word.
). On the other hand when you look at other stories in the OT, lets say the Exodus story, I have no reason to doubt that that is anything but the truth.
