I'm in the exact same situation (except that my GPA is fine for honors, I just got screwed out of completing my project by my PI). In any case, I started a thread about this last week sometime and most of the feedback suggested honesty. For the most part, I don't think this will affect your chances much unless the reason your GPA dropped because of really awful grades this past semester - which would be a different reason, not just because you didn't do your thesis or complete honors. In any case, the way I'm going about this is to go through my interviews as I've started them, still talking about the research I've done and all that. Then, after I get accepted, I will send them an updated transcript with the new classes I'm taking this semester. That would be a subtle way of telling them that I'm no longer doing my thesis (which was listed as an expected class for this semester on my AMCAS) and I figure if they have a problem with it, they will let me know. If not, alls well that ends well.