Over time, the gravitational attraction between the particles caused the cloud to condense to a smaller volume. Keep in mind that as the radius of the cloud decreased, the angular momentum didn't decrease, and so the speed of the spin increased. This is the same effect you see when an ice skater starts spinning slowly with arms outstrtched, and then picks up speed the tighter she pulls in her arms.

The cloud continued to spin and contract. However not all parts of the cloud pulled in to the center equally. Those particles around the plane perpendicular to the axis of rotation felt centrifugal "force" - actuall just their linear momentum - keeping them from moving towards the center and fighting against gravity. Particles closer to the axis of rotation felt this less, and were pulled in more. Thus the cloud became a disk, just as a blob of pizza dough thrown in the air with a spin flattens out into a pie shape.