Shiva is considered as the destroyer of the universe, in Hinduism. Shiva is a complex god, in terms of nature and represents contradictory qualities, being the destroyer and the restorer simultaneously. There are numerous legends surrounding Lord Shiva and his powers. Here're a few popular stories of Lord Shiva.

Story of Shiva Lingam - Why Shiva is worshipped in the Phallic Form
This is an interesting story regarding the worship of Lord Shiva in the phallic form. It is believed that once Brahma and Vishnu, the two deities of the Trinity, got into an argument regarding their supremacy. Lord Brahma declared himself to be more admired, being the creator. While the preserver, Vishnu, pronounced that he commanded more admiration. Just then a huge pillar of fire (lingam), called as Jyotirlinga, appeared in flames, before them. This Lingam enthralled both Brahma and Vishnu, with its hastily increasing size.

With this incident, they forgot their quarrel and decided to find its size. Vishnu took the form of boar and went to the netherworld. Brahma assumed the form of a Swan and flew to the skies. However both of them were unsuccessful in completing the self-assumed tasks. At that time, Shiva appeared out of the lingam and acknowledged that he was the progenitor of both, Brahma and Vishnu. So, he should be worshipped in his phallic (lingam) form, and not in the anthropomorphic form.