Caveat (because you can't write anything without them anymore, it seems): I think that bearing false witness is a wretched sin for which we should never employ the gift of language. That said:
When we would catch my dad out in a somewhat different story from its original, he would grin and say, "It's just exaggeration for emphasis."
The other evening, I heard another take on it on some television show I was watching; one character had left out a significant element of a story about another, and when called on it replied: "Let's call it 'truth reimagined for the greater good.'"
I thought it was kinda cute, in the context.