Hi B....so I don't have any genius pieces of advice except to say that I do know it's a perfectly normal phase they go through at that age. I have 2 girls and I did explain to them that lying was bad and that I wouldn't know when to believe them, blah blah blah and it never got hugely out of control (only because I got lucky...not because my talk was part genius or anything).
Boys are probably a little different (I've heard they don't like "the talks" so much LOL)...a friend of mine with a boy tried this to make her point:
When she dropped him off at school (or preschool)one morning she said "today when I pick you up we're going to go to McDonald's for milkshakes!" Her son was so excited. When she picked him up he said "yay time for milkshakes" and she said "actually no I lied, we're just going home." She did this a couple times (using different "lies") and he got very upset and frustrated and that was the end of the lying phase. They both made a pact that they wouldn't lie to each other and then she really did take him to milkshakes.
I'm sure some people will think this is not good advice, but it worked for her and I was (an am) willing to try it myself if I need to.
Good luck! Try to remember its just a phase! This too shall pass! LOL
L
P.S I'm a stay at home mom to 2 girls age 8 and 5