I really prefer to tell the truth. I find it to pay off in the long run.
My primary example of this...
Giving an honest reason about why you don't want to go to a social event. -- if you are giving half ass excuses, nobody is going to buy it. Even if they say they believe you, when you aren't around, they'll just cut you down behind your back.
It might be hard to look someone in the eye and just say "No, I don't want to see that movie. I'd rather sit at my desk and play video games"
Believe me, though, it pays off. Later on, when you do say you want to hang out, they appreciate it a lot more.
One other thing: if you are in a serious relationship with someone, honest communication is worth its weight in gold. That means more than just answering questions honestly, it also means openly speaking your mind in a tactful manner.