Depends on the situation.
Lies should be avoided. Too hard to remember what they were and what subsequent ones need to be told to make the original one(s) hold up.
Even "the truth" is subject to memory and interpretation.
Even "little white lies" can lead to annoyances and misinterpretation -
Example: Someone tells me they "just love the fruitcake you gave us for Christmas!" - and they really don't like it at all - so I go make them more fruitcake (expensive to make and I personally don't like it) because I think they really like it - and then they get it and they are thinking "who in the world can I give this to" - or worse yet - they just dump it and wonder why in the world do I keep on giving them fruitcake for Christmas?
This is an example of where "honesty" is difficult - How does one say "I hate fruitcake" when one has just been given a fruitcake?
(hmmm - interesting that I came up with "fruitcake" for this example! )