This is a great question! However, since your question is so insightful, it touches on a great deal of how stars and star systems are formed. Thus a full answer is pretty long, so bear with me.

It is currently believed that the solar system formed from a large mass of gases and dust consisting mostly of neutral (normal, non-ionized) hydrogen gas. Small amounts of all the other elements were also present in the gas cloud (probably the remnants of a past supernova).

With any group of matter (in our case we mean the gas cloud), gravity will pull everything directly toward each other. This acts exactly the same as though all of the material were being pulled toward the "center of mass"(aka - "center of gravity") of the gas cloud.

If there is nothing to counteract this force pulling all of the matter toward the center, and it does not rotate, the gas cloud will condense into a single spherical mass which just sits there in space. {ASIDE: If there is enough gas in the cloud, the accumulated gas will exert tremendous gravitational force compressing and heating the hydrogen to the point of enabling a fusion reaction to take place. This releases LOTS of energy in the form of heat and light and provides a counteraction force to stop the further contraction of the gas cloud due to the gravitational compression. This is how stars are formed . I use this idea of needing a counteracting force to stop the gravitational compression later.

So what happens if the gas cloud is spinning slowly before it collapses from the gravitational force pulling it inward? Several important things will happen:

1. The gas cloud will act in a way similar to a spinning figure skater who pulls in her arms, the slow spin speeds up into a fast spin. Thus, the gas will spin faster and faster as the gas collapses toward the center of gravity.

2. This increasing spin rate (called rotational velocity) creates an apparent outward force which will counteract the gravitational inward force. Like a ball on a string, if you swing it around fast enough, it will stay suspended in the air with its rotational outward pull counteracting the inward pull of the string on the ball. Similarly, with enough rotational velocity, the forces on the gas cloud will match each other at orbital distances similar to those our planets inhabit today.

3. MOST IMPORTANT: the apparent outward force caused by the rotation of the gases only acts in the plane of rotation (for example - the disk swept out by the ball and string as it whirls around). In all of the other directions, it will not counteract the gravitational compression and the gases will collapse down into this plane.

This same general situation holds for the formation of the planetary moons and rings around Jupiter, Saturn, Uranus and Neptune (which all exhibit similar planar orbits). The planets (or moons) are then formed by the coagulation or "clumping up"of the material in the now disk-shaped gas cloud orbiting the center or gravity of the original cloud. Clumps in circular orbits are favored since they can't hit each other like more highly eccentric (oval) orbits eventually do given enough time.

I suspect you have already heard about this part. If not, feel free to ask more. Pluto is a special planet in that it does not orbit in the "ecliptic plane" in which all the other planets orbit. It is offset from the plane by about 17 degrees. It also has the most eccentric orbit of the solar planets. As I understand, this could be due to many possibilities. One is Pluto being pulled out of a more standard circular orbit by a passing star some time ago. Another is Pluto being an interstellar planetoid which got "caught" by the sun and pulled into its present orbit. Another possibility is that it is simply a leftover of the early clumping phase of the solar system formation - it somehow got hurled into its far-flung, unusual orbit by interaction with larger planets and just hasn't gotten caught and incorporated into a larger planet like almost all of the others. Nor will it now.

Maybe someday soon we will be able to send off the anticipated space probe "Pluto Express"--from the Jet Propulsion Laboratories (JPL) in Pasadena--and find out.