Being honest doesn't hurt you sales ability. I'm extremely honest but I was able to go from salesman/finance/sales mgr/gsm/owner over the course of 15 years in the car business. Not being able/willing to take shortcuts (like lying) can hurt you in the short run but in the long run you'll be a better salesperson because of it (or in a different, non-sales type position).
-This is true. I work at a Microcenter and try my hardest to match up a customer with what he actually needs for the best price and don't shy away from letting customers know if our competitors have something comparable for a far better price (monoprice.com, for example). Its a lot easier in all things, IMO, to be honest than to keep your lies straight. I'm at the high end of our pay scale, make my numbers and have made more than a few loyal customers.
People have to understand though that retail is brutal and management is often breathing down an associates neck to keep the customer turnover going as fast as possible. Associates also have their own history of bad experiences with customers: time thiefs that are either dangerously ignorant or so distrustful of salesmen that they seem to have hardened themselves to even good advice if a salesman is saying it. Whats worse (I think some in this thread will find this humorous) is once you've figured out what someone wants and needs and are well into helping them some "good Samaritan" who hears one small part of your conversation with no context comes barreling in with all the wrong advice and confuses the hell out the person you are helping!
That being said, there are definitely a few people that know everything they know from the vendor directed training, have no regard for the customer and are willing to tell them anything to make a quick buck. Unfortunately the comeuppance for these types is rare and far between but its so sweet when they get called out on their BS.