The Quran states regarding the position of human beings that:
We have honoured the Children of Adam and carried them on land and sea, and provided them with good things, and preferred them greatly over many of those We created. S. 17:70 Arberry
And indeed We have honoured the Children of Adam, and We have carried them on land and sea, and have provided them with At-Taiyibat (lawful good things), and have preferred them above many of those whom We have created with a marked preference. S. 17:70 Al-Hilali & Khan
Despite a small difference in emphasis that is seen in these two translations (which is discussed in this article), it is clear that, according to this verse, the Children of Adam, i.e. human beings, are (highly) preferred by Allah over much of the rest of creation.
Note that there is a restriction in the last clause. Human beings are preferred above many of those that Allah created, but not above all of the rest of creation. It remains unclear what other creatures Allah is preferring above human beings, but apparently there are some. Note also that there is no restriction when talking about the Children of Adam, i.e. Allah does not prefer only some or many or most of the Children of Adam, but the human race in its entirety and without any distinction is preferred above most of creation.
However, the Quran also makes other statements about human beings that do not harmonize well with the positive pronouncement of Sura 17:70.
Verily, those who disbelieve (in the religion of Islam, the Qur'an and Prophet Muhammad (Peace be upon him)) from among the people of the Scripture (Jews and Christians) and Al-Mushrikun will abide in the Fire of Hell. They are the worst of creatures. S. 98:6 Al-Hilali & Khan
And surely, We have created many of the jinns and mankind for Hell. ... S. 7:179 Al-Hilali & Khan
Obviosly, neither an individual human being nor a group of people can be "preferred above much of creation" and at the same time also be "the worst of creatures". Sura 98:6 is clearly contradicting S. 17:70, but the contradiction will become even more startling when we look at the numbers of Muslims ("believers", even including the nominal non-practicing ones) and non-Muslims ("unbelievers", whether Jews, Christians or pagan idolaters according to Islamic understanding). Today, Muslims make up about 1.2 billion out of about 6 billion human beings. That is roughly 20 percent. Christians alone are about 2 billion or 33 percent.
As noted above, S. 17:70 makes a general statement about the Children of Adam, without any restrictions. A general statement may still considered to be true even if it does not hold for a small exceptional group. [Example: Human beings have five fingers on every hand. That is true for more than 99.5% of human beings. Nevertheless, there are humans who have lost fingers due to accidents, and there are others who are born with six fingers on one or both hands, or with fewer than five fingers. These exceptional cases do not disprove the generally true statement — unless it specifically claims to be true in an absolute sense, e.g. by formulating "every single man on earth has ...", or "human beings, without exception, have ...".] However, if a general statement turns out to be wrong for a sizable portion, let alone the majority of those about whom it is made, then it is no longer a true statement.
Since the "unbelievers" (according to Islam) are the vast majority of mankind, and thus are "the worst of creatures" according to S. 98:6, the general statement that the Children of Adam are preferred by Allah over many of his creation is falsified. These two verses contradict each other.
Moreover, at the time this statement was "revealed" to Muhammad the Muslims were a tiny minority of mankind, definitely less than one percent, probably less than 0.1%. Both suras, 17 and 98, are dated near the end of the Meccan period or the beginning of the Medinan period, i.e. before or at the very beginning of the military expansion of Islam when the Muslims numbered at most a couple of thousand people.
Some may argue that 17:70 is true "in principle" and it expresses Allah's intention, but the unbelievers then lose that status of being preferred due to their unbelief and disobedience to Allah. However, this solution to the contradiction is prevented by S. 7:179 which clearly states that many of mankind are originally created for Hell, i.e. Allah intended them to go to Hell from the very beginning, from the time they were created. It is not their unbelief that destroyed Allah's good intentions; Allah's purpose for them has been Hell even before he created them. Note also here, this verse does not speak of only a few but of many of mankind who are created for Hell.
One could nearly get the impression that being preferred by Allah means being destined for Hell.
Further Reading
How, how much, and above whom are the Children of Adam preferred?
Contradictions in the Qur'an
Answering Islam Home Page