Literal Interpretation of the Bible: Right or Wrong?

In recent years the growth trend in churches has been among those claiming to be "Bible believing"  and with doctrines that describe the Bible as the literal word of God.  In fact, so-called "Liberal" churches have lost membership while the fundamentalist congregations keep attracting new members.  Some might argue that this is nothing to be concerned about, people can believe what ever they want.  True, of course.  When it becomes a problem is when these people try to use their beliefs as a guide for how they believe the World should be.  Its fine to believe in any religion or god a person chooses, as long as they don't try to force those beliefs on others or on the system of Government.  One could believe the Tooth Fairy created the World in 10 minutes, but when they try to teach it in schools, that's another matter. 


For example, if a person took a literal interpretation of the Bible, than the entire planet was flooded by water that came as rain for forty days and forty nights.  The only survivors being the family of Noah and two animals from each species on Earth.  
A big fault in the story would be sheer size.  A modern day aircraft carrier could not hold two of every species on Earth.  And then there is the problem of where all the rain came from.  Our atmosphere is not big enough to hold all the water that would be required to flood the Earth. What about diversity?  Did Noah go down to Australia to drop off the Marsupials?  


The Bible literalists have explanations for these, as well as any other contradictions that might be found in the Bible.
For example, one explanation of the water problem is to say that the Earth passed through a giant deep space water vapor cloud.  Water does not exist in deep space except as ice.  If that much water was to come to the planet from space, old Noah would have had a lot more to worry about than keeping the tigers from eating the rabbits.  It would have destroyed the planet.