I never lie: should i be successful it's pretty much advertised when i hand my p45 to the new employer anyway, and i don't like being exposed as a liar in general.
however, i never use exisiting salary as a guide to what i want in a future role either, so it would be something of a moot point. my guess is that it's often used to gauge whether i#m in the right sort of area (experince-wise) for the role by headhunters & the like