This is an interesting topic. Who have you met that truly reflects "the image of God" in their entire lives and lifestyles? Absolutely no-one if you are honest!
The truth is that man was never "fully" in God's image -- otherwise Adam would not have disobeyed His Father. The confusion is due to the translation of "God created man in His own image..." This part of this answer is probably a topic for the Biblical Hermeneutics thread, but the Hebrew actually reads "God CREATES man in His own image, in the image of God creates He him... and her."
Adam's children were born in his image, not God's (Genesis 5:3).
Christ is the image of God (Colossians 1:15-17).
We are not anything near (yet) to imaging God as Christ did.
BUT, since we were sealed with the Holy Spirit (Ephesians 1:13)...
we are to conform ourselves to the image of Christ (Romans 12:1,2)
and as we do that...
we are being changed into that same image by the Spirit (II Corinthians 3:18)
When Christ returns we will be changed -- the new spiritual body is required for us to be fully conformed to Christ's image who is the image of God.
It's very informative to learn that it was not until man "fell" (a non-Biblical term for Adam's disobedience -- he didn't "fall" because he was not "exalted) that God said, "And the Lord God said, Behold, the man is become as one of us, to know good and evil" (Genesis 3:22)! To be conformed to God's image requires the knowledge of good and evil, and so we see the purpose of that test. God knew what Adam would do and planned for it by slaying the lamb "from the foundation (disruption) of the earth" before he even made man (Revelation 13:8). Mankind has to learn good from evil and that is the entire purpose of this earthly existence WHILE we are being made into God's image.
So we see we are now partially (knowing good and evil) -- but not yet fully -- in the image of God. When God becomes "All in all" (I Corinthians 15:28) then "all" will be in His image.
Hope this clarifies things.