I saw a meme by Paulo Coelho that written, "Telling the truth and making someone cry is better that telling a lie and making someone smile."
I don’t necessarily agree with this. I certainly value honesty—even brutal honesty at times—but there has to be a cost / benefit analysis present. Making someone cry with the truth if it serves them no benefit can be summed up quite simply as being a dick.
Honesty is quite often used to defend being a general douche—in my opinion that isn’t okay, especially when it is aimed at shaming those less fortunate; "You're fat. Hey, at least I'm honest." Most of the time, the truth can set you free, other times it can do nothing but destroy. It absolutely depends on the situation and on the presentation.
Tact and decency go a long way. There is normally a third way. If there is no third way and the lie is harmless why bother upsetting someone?