While I don't necessarily agree that Man needs lies, Terry Pratchett made a very good argument for it in Hogfather:

Death: Yes. As practice, you have to start out learning to believe the little lies.

Susan: So we can believe the big ones?

Death: Yes. Justice, mercy, duty. That sort of thing.

Susan: They're not the same at all.

Death: You think so? Then take the universe and grind it down to the finest powder, and sieve it through the finest sieve, and then show me one atom of justice, one molecule of mercy. And yet, you try to act as if there is some ideal order in the world. As if there is some, some rightness in the universe, by which it may be judged.

Susan: But people have got to believe that, or what's the point?

Death: You need to believe in things that aren't true. How else can they become?