I've seen Prometheus twice now and went through a lot of the questions I had in my own mind about the biology and premise of the movie. So I thought I would distill them a bit here for discussion.
To cut to the chase, the key question Shaw asked the engineer was why did you create us then want to destroy us. And it was clear they wanted to.
Let's go back 2000 years. A single engineer is dropped off on the moon by its ship in the opening sequence. It drinks an engineered organism that can replicate and replace DNA of the host organism in order to form derived organisms. As a result of drinking a solution of this engineered creation, the engineer's cells experience breakdown on account of the deconstruction of DNA in the cells. The engineer purposely positioned himself next to the waterfall of a river so that his body's remains could enter the river. There the alien could reconstruct the DNA and begin simple cell divisions. In this way, the engineers were "seeding" or "innoculating" the river so that they could then collect the water and put it in the cannisters to store on the ship for the trip to earth or other suitable planets.
When the crew of the Prometheus first enter the chamber with the giant head, we see on the ground as a foot is being lifted, small worms likely native to the planet (after all the planet had clouds, and a suitable atmosphere for life). Once the crew disturbed the canisters, the black organic material flowing from them was the alien cells that hadn't yet had an organism to "redefine". So, their first encounter was with the worms. Taking the worm DNA as a template, they reconstructed it to become the white tentacle-like creature that attacks the two crew members later on. But all they could do was attack, enter the crew's bodies, etc. or infect them with cells that could modify the crew's DNA, nothing more.
Then David did his deed, infecting Charlie with the cells from an ampule taken from a canister. Charlie's DNA was being slowly rewritten, much more slowly than what happened to the engineer, for whatever reason, perhaps in order so that it could be transmitted more easily (no point engineering a virus to kill instantly or it won't be transmitted so readily). It would have then infected Charlie's sperm. Charlie and Elizabeth had intercourse, resulting in something unusual, a recombination event between the modified, and now alien, sperm, and one of Elizabeth's eggs. This would transform the alien from one that simply infects and modifies to one that carries out host-based reproduction. Then, Elizabeth gives birth to a creature that was a hybrid of the worm creature and one of Charlie's sperm which at that point would have been alien. Thus the resemblance between a sperm and a worm, or an octopus-like creature with bilateral symmetry. This was the queen. And it grew to immense size into what essentially was a giant face-hugger. This then could infect or impregnate the engineer, which led to the creation of a hybrid between the engineer and the alien, or something more like the alien we are accustomed to seeing.
So why destroy life on earth? 2000 years ago my guess is that the engineers probably decided that humans were advancing too quickly and for fear of them destroying the engineers in the future, they decided to decimate earth's life by transforming it. It was likely a matter of self-preservation.