My parents used lie to me about everything to the point where i still don't trust what they say.
They'd lie to me about what i was eating even though i knew they were lying, they lied on behalf of family, they lied about how much things would hurt, they lied even if they knew i'd find out within minutes it wasn't true, in fact, they lied daily about everything big and small.
When my mother tries to do it to dd now i pull her up on it and refuse to allow it. My honesty with dd means she trusts me implicitly and that has stood us in good stead time and time again, doctors and nurses are constantly amazed at her trust in me when it comes to medical procedures as she knows that when i say 'it'll hurt x amount but be over in y time' that it's the truth... not a sugar coated 'It'll just be a prick, it'll be over before you know it'
She knows when i tell her i'm going out for a certain amount of time that that's how long i'll be, not 'I'll be back soon' and not to return for days... as a result depite being quite a clingy and anxious child she happily waved me off on the plane for a weekend away much to my mothers amazement (she had attempted to lie and tell her i'd be back soon, and when confronted told me i'd scare her telling her i'd be gone for a few days, that i should say i'd be back later and 'she'll forget about it when she's at home having fun with [dp]' )
I told her in detail about how babies are born and that it hurts mommy but it's ok, as a result when we were almost stuck at home for ds2's birth and i was contracting heavily for several hours at home she was completely unfazed and gave me a kiss on the belly to make me feel better and wandered doff to watch tv.
She knows sausages are pigs and lamb is baby sheep, she knows what animals her milk comes from and none of that has bothered her.
Ds1 is younger but he's already starting to benefit from my (occasionally brutal) honesty as well and i wouldn't do anything differant having seen how much it helps dd to know the truth.
Like wannabe, i see santa as a fantasy that is easily seen through when they get old enough but provides a bit of joy now, telling a child who sounds like a cat being skinned alive that she's a beautiful singer can lead to lots of heartache and anguish though if they then pin all their hopes and dreams on being a singer.