Honesty is the best policy?

I was watching Sex and the City last night, and there was a quote from there that really got me thinking.
Paraphrased:
Is telling the truth the most selfish thing a person can do? If you tell someone something, (ie a hurtful secret) just to absolve your guilt, when the only thing you'll be doing is to hurt them unnecessarily.

It was much more elequant (sp?) in the show, but the point is should you tell someone a dirty secret b/c you have so much guilt about it, are you hurting them unnecessarily because they would have been so much happier never knowing.

It just got me thinking: is honesty REALLY the best policy??

Thoughts?