Occasionally you will be called upon to provide a reference for a bad library employee or coworker. Giving a truthful response and illuminating the candidate's shortcomings means that you will continue working with this person indefinitely. No one will every hire them if they know the truth. Fudging a little and making the person sound better than they actually are allows you to pass the loser off to someone else. Always consider your own happiness and opt for the latter strategy.
And on a related note: never trust a reference from a current employer.