I think it's possible to be too honest in that there are occasions where being truthful is both unnecessary and annoying. For example, if someone mentions something trivial about you that is slightly inaccurate, correcting that person for the sake of it is unhelpful.
However, when it comes to white lies or allowing people to become deceived when it's to your benefit (when honesty is expected), that's not a good idea in my opinion and I think doing that is unethical. Personally I aim to tell the truth 100% of the time. The only times where I find myself lying tend to be at work to cover up some short-coming of my behaviour to protect my career, but I'd like to be stricter on this as well.
In relationships I'm especially honest. Trust is the very foundation of a relationship and I won't erode at it for the sake of avoiding things that might hurt feelings. Relationships can survive people getting hurt feelings - they can't survive loss of trust. But aside from that, as I said above I think it's unethical to lie to people when they expect the truth.
I wouldn't tell someone she "doesn't look fat in that dress" if I thought she did. I wouldn't go out my way to tell her that but if she pressed me I wouldn't lie about it. If her self-esteem is really so fragile as to be reliant on white lies then she has bigger problems than an honest partner and should address them. I wouldn't be helping her by being dishonest.
I'd add that I find being open to people difficult. I don't try to deceive people but I don't necessarily like talking about my feelings either.