It's far more valuable to know who else is lying, and trying to gain information from other people on the table. So much of the game comes from figuring out what other people will do. Being persuasive is also very important, and it's very hard to be persuasive when people know you are a good liar.
playing a game where everyone is honest (especially in diplomacy where there is no random variation), you already know who is the winner from the onset. who would even want to play. diplomacy will always end in a tie if 'teams' are even and once you outnumber the enemy its over, unless someone doesnt keep their end. maybe I am remembering the game wrong
Over multiple repeated games with the same players, no doubt some sort of equilibrium arises where on the scale of 0 to 1, zero always being a care bear, and one always being cutthroat, an optimal strategy probably lies... well, I'd be curious to know exactly where that optimum lies, actually. Anyone care to guess? My guess would be somewhere around ~.25.