Material life had to be created in order to stabilize realities, so people could get their heads straightened out. Why would spiritual life mess up minds? Because the realities are not stable enough, and this allows satan to mislead people.

Before explaining this further, it is important to notice that Christ focussed on this problem and attempted to teach people how to overcome it. He said people must build their lives on the foundation of his words (Luke 6:48). Concentrate on the word "foundation". It means something stable and unchanging. And it is truth. Christ's entire purpose was to testify to the truth (John 18:37). The foundation is created through truth. There are a lot of words (concepts) which are not part of the foundation. The ones in the foundation are the basic realities, which start with the definition of reality and then extend into elements of rationality, which determine moral truth. Christ said to look and listen (Mat 13:16)(Mark 8:18) and judge for yourself (Luke 12:57). This is how rationality is developed through evidence to determine truth.

Notice that all of this looking and listening, defining and evaluating, requires stable realities. How could it be done without material life? It doesn't get done without material life. In fact, communication in the spirit world is highly prone to misrepresentation. You get stuck with whatever impression someone wants to give you, and there is no way to test it for truth. Communication by impression may be no problem when surrounded by perfectly moral persons, but when sin develops, it becomes a quagmire of fraud designed to promote sin. The consequence is demonstrated by the story of Adam and Eve in the Garden of Eden. The devil knew all about lying to get people to sin. This story was placed at the beginning of the Bible to show that people needed to use the lessons of life and religion to overcome the sin.