Sugarcoating a Bitter Pill

Okay, so I am being philosophic again. I have that sometimes. Mainly in the morning, on the bus, going to work. What else can you really do in the morning, when you're not really awake yet, than listen to music from your mp3-player, stare out the window and let your thoughts drift? That's what I do anyway.
Today I thought about the concept of honesty.

Even though many people say they appreciate honesty, there is such a thing as being too honest. And the same people who claim they appreciate honesty aren't always the most honest people themselves.
I think it has become more of an empty phrase to say "Honesty is important".
And while it might be polite to make small talk with a person you don't really know or particularly like, I think it is dishonest to hang out with them all the time as if you did like them.
I am rarely rude to people I dislike. Mostly I just ignore them and hope they will go away. With some more resistent types that doesn't work, which leaves me no choice but to resort to more crass measures.
Yes, think I am arrogant now, whatever. You have people you don't like. Frankly, I think it is better for either of us, them and me, if I don't pretend to be liking them and later it is revealed I never did. For what does a revelation like that really do for anyone's confidence?
Granted, to be friends with me requires a certain tolerance for directness and (harsh) honesty. I put it as it is, I say what I think, I rarely sugarcoat things, I call people out on their half-assed opinions.
I believe my honesty is one of my better qualities though. If nothing else, you can rely on Phoebe to tell you what's what if you wanna know. I will answer every question as honest as I can according to the knowledge I have at the time I am asked.

So, when people say they appreciate honesty, which kind do they mean? Do they mean politeness? Or do they mean merry-making? Or honesty as long as it ain't about something personal?
If you ask someone "How do you like my new shirt/haircut/picture/short story?", do you want them to say "Not really good" or "I didn't like it" or "Merely okay" if that is what they think? Or do you want them to lie?
Do you want someone, who doesn't really like you, to be nice to you and pretend as if they liked you? Or would you rather have them show you in some way that you two can't be friends? Would you find that more hurtful than finding out after a few weeks of hanging out with them that they don't really like you?

How far is honesty supposed to go? Between friends? Family? Business partners? Associations? Strangers?

Please comment.