I'm a teacher and there are times when I have to tell a parent something about a child that is definitely bad news. I always first say something good about the child (yes, always) then give the bad news. Finally, I try to soften the blow by saying something positive about the situation: "He learned a hard lesson but he'll always remember that ______ has it's consequences. You'll never have to deal with this again." If the child is there, I make sure to give him the opportunity to agree.
There are ways to tell people the truth without scaring them for life. Generally people already know the truth but want some kind of affirmation for their efforts. Just saying that can be a kindness: "I can see you worked hard on this, and there are things that I really appreciate about it. If you keep practicing you'll soon be an old pro teaching me some techniques. In the meantime, give me a call if you want some advice or constructive criticism." Gets me off the hook and gives the other person options about the criticism.
And if I hate it/it's not my taste: "I wouldn't think to ________. This gives me something to think about for my own work. Thanks for giving me another perspective."