"Literally" is a terribly abused and misused word. At the worst extreme is the person who uses it this way, "I was so embarrassed that I literally died on stage." Obviously a misuse of the word. But almost everyone considers the primary usage of "literally" to be in contrast to "figuratively." Synonyms for this usage wood be "woodenly" or "concretely." And while using "literal" to distinguish from "figurative" is frequently valid, there are a couple of (intertwined) problems with such a usage with reference to Bible study.
First, to interpret the Bible "literally" actually has a broader--and more important--meaning (than just "not figuratively"). Second, when "literal interpretation" is advocated as a hermeneutical principle (a Bible study method), it has always been (whether among the Protestant reformers or Bible scholars today) this other, broader meaning that is in view. To cut to the chase...
To interpret literally is to pay attention to the normal rules of grammar, speech, syntax, and--especially--context and literary genre. The Bible contains passages that run the gamut of literary genres, including historical narrative, Hebrew poetry, parable, proverbs, prophecy, epistles (letters), apocalyptic literature (to name just a few) and further contains all sorts of stylistic touches (hyperbole, simile, anthropomorphism, figurative usage, and such).
So, if someone were to ask me whether I read the Bible literally, the answer would have to be "Of course!" But then, we all do this normally with whatever we're reading anyway. Think, for instance, about this newspaper headline...
Indians Mauled by TigersYou would very naturally and easily interpret this brief message in two different ways depending upon whether you were currently reading the World News section or the Sports Page (during baseball season). If the former, you would end up interpreting the headline woodenly, whereas you would recognize the latter as hyperbole, exagerration, or figurative.
So the question of interpreting Genesis One is not whether it is to be taken literally but rather what is the correct understanding of the genre (historical narrative, poetry, or other) and how much emphasis to put on the anthropomorphisms and such. This is why I suggested (in the last post) that all twelve of the views of Genesis One are literal views. By that I meant that even those four views that do not interpret this account woodenly nonetheless represent attempts to accurately assess the genre and other literary conventions. Proponents of the Framework Hypothesis come to the conclusion that Genesis One is more properly considered a poetic polemic than an attempt at scientifically accurate historical narrative (and they may very well be right).
Many evangelicals in our day seem to think that it is more spiritual (that it somehow demonstrates greater faith) to interpret the Bible woodenly ("literally"). But this is silly. There are times when we certainly must not ("I am the vine, and you are the branches"), many times when we must, and many, many passages in which we cannot be certain. (This is the heart of the issue that divides Roman Catholics and Lutherans from most Protestants regarding the text "This is my body." Luther--with the RCs--insisted on a wooden interpretation of this verse, where most Protestants take it figuratively or symbolically.)
The bottom line is this... interpreting Genesis One depends upon accurately assessing its genre, context, and intent. Believing, inerrantist scholars vary broadly on their conclusions, and there are no rewards offered for interpreting a passage woodenly/"literally" merely for the sake of doing so. It may be easier for modern evangelicals to interpret Genesis One woodenly (easier in that doing so alleviates the need for the hard work of understanding the Hebrew, comparing other relevant Bible passages, and considering how general revelation informs the issue). But insistence on such an interpretation presents to unbelievers in our day (especially those with some understanding of the latest discoveries about our universe) a significant and unnecessary barrier to considering the more central claims of the Bible--including the claim that the eternal Son of God died to redeem them.