IMO... there is never a reason to be anything less than honest... BUT... people that are brutally honest I have an issue with, you can tell someone the truth, even a painful truth and not be a dick about it.
Being blunt is fine, going out of your way to be harsh with your bluntness... is just the sign of a weak person.
For example, lets say you had to tell someone that they were incorrect about a fact they were insisting on... lets just make one up for now... let's say they were asserting over and over again that they invented the electric magical nose flute, and they were very happy about this.... but you found an article that Kat actually invented it in the 70's and that they are full of it (even if they don't know it).
Honest statement: "Actually, Kat developed that instrument back in the 70's while she was dating the Roger Waters, so that is incorrect."
Politely honest statement: "I am sorry, but that is incorrect, Kat developed that instrument back in the 70's while she was dating the Roger Waters, but it's cool you are both into it.
Unnecessarily brutal honest statement (as spoken by douchecrews): "Dude, get a fucking clue and do some research, Kat developed that instrument back in the 70's while she was dating the Roger Waters, stop talking without thinking you son of a Piglious."
(I do find it funny that people who are unnecessarily rude with their statements, true or not, always act all defensive when called on it... they say things like "Hey I am just telling it like it is." or "I am just calling a spade a spade." or "I am just being blunt if you can't handle it it's your problem" or some other bullshit... No THE FACT THAT YOU CAN'T BE POLITE IS YOUR PROBLEM YOU FUCKING WASTE OF YOUR MOTHER AND FATHER'S CELLS---oh and by the way if that last statement sounded harsh? I am just telling it like it is )