In my experience, if you love someone, you should be honest with them.
I was in a situation regarding this not so long ago - I could lie/hide something, and keep someone's hopes up, or tell them the truth and hurt them.
Though at first, I considered lying to/hiding something from them; I realised I couldn't, as the feeling of guilt was too bad. I knew that hurting them would make me feel even worse, and would hurt them; but in the long run, be better for them even if it meant I lost them. So I told the truth, and luckily things worked out.
I've learned from that; and I'd never ever lie to someone I love, or hide anything from them, to spare them the pain - people deserve to know the truth. For me, the best thing to do for someone you love is to tell them the truth, then be there if they need you to deal with it.
The truth's always best in my opinion.