Much has been said about James Frey's dubious memoir A Million Little Pieces. Briefly, I believe readers deserve to know if they are reading fact or fiction so they can decide freely whether to keep reading.
If we cannot be sure what an author is writing in one case, how can we be sure of anything he writes? The uncertainty would eat at me such that if I did enjoy the writing, the feeling would be hollow.
Likewise as an author, I let readers know early on what they're getting from me and they can then enjoy my work for what it is.
No doubt some authors and publishers are interested in sales above all. These people sicken me.