I use no quite freely, though I always follow it up with an explanation and a way of putting a more 'positive' spin on it, if that makes sense?
Like:
"No, you can't have a biscuit. We're just about to have dinner. If you eat enough dinner and do your homework, then you can have one."
"No, you can't go and play outside. It's nearly bedtime. You can go out again tomorrow if it's nice though."
"No, you can't have more pocket money this week. If you want to buy Monopoly, you need to save your pocket money up. If you would like to earn some extra money, you could do some chores for me?"
"No, you can't walk home from school by yourself yet. You're 9 years old, it's over a mile away and you need to cross two main roads. Mummy would worry about you - I love you heaps and don't want you getting hurt."
Hearing the word 'no' all the time can really, really grind a person down - child or adult. But there are loads of easy, subtle ways of doling out a 'no' that won't leave them feeling downtrodden. And let's face it, it's a bit shit being told no. It's a part of life and everyone needs to learn how to deal with hearing it, but little people are constantly learning new things about how the world works and it needs explaining to them. I think of 'no' the same way I do constructive criticism. It's crap to hear, but a little explanation and maybe suggesting X, Y or Z can turn what is fundamentally a negative into a positive.
Think of it in adult terms. If someone tells you no, what is usually your automatic response? Why? Children are no different. They're not necessarily being petulant by questioning your answer, they're simply trying to understand it. Unless they go on and on and on and start making your eye twitch. It's at that point you stop, walk away, ignore them and eat all the biscuits 