Personally, I think a large reason many doctors are not completely honest is that they want to maintain hope in their patients. The balance between being honest and cultivating hope has always been an ethical gray-area, and I think there could be some real benefits from more training in this area.
A lot of literature has been published about balancing honesty & hope, especially in fields like oncology. Here's an article I found that has been cited 77 times:
http://jco.ascopubs.org/content/13/7/1817.citation (google cache
here ) by researchers at Case Western for the Journal of Clinical Oncology.
Edit: Hopefully others can view it through the google cache. It was a little tl;dr so I focused on the conclusion