If the review is going to be awful - I mean really awful, then I contact the vendor and let them make the call. Part of the issue at my site is that I'm passing on recommendations, so if I would recommend against it....well....like I said - I check with the vendor first.
If the product has its pros and cons as most things do I tell the truth, but I'll still let you know if overall I loved it. I have also implemented a new reviewing system where, at the end of the review, I write who will like the product and who will not like the product. For example, I attended the Yanni Voices concert and loved it! But I think it's pretty obvious that not everyone is going to enjoy that concert. In the review I said it was not for those of you who made fun of the band kids in high school. I think it got the point across honestly!
When writing honest reviews, though, proceed with caution. I was once sent a pay-to-publish book that had so many typos that I found it distracting. I mentioned that in my review and the author was furious. She actually asked me to send her the list of typos....which I did, for the first eight pages. Then my hands got tired. ;)
I think that as with everything else, honesty is the best policy!