I've thought a lot about this issue over the years, and it's not as simple as some of this discussion seems to be trying to make it. My basic view was originally more or less in line with Smuggles, but I've softened that perspective with time.
As I see it, there's a continuum where gaming, friendship, and trust are concerned. Here are a few points off the chart, and my personal take on each.
Casual Board Games
Examples: "Revolution," "Unexploded Cow" (both excellent games, BTW)
These are quick-to-play games with minimal time and personal investment involved. Deception (of some sort) is a common explicit or implicit gameplay element. They are usually played among existing friends.
Personal approach: When playing these, I am an utterly ruthless motherfucker. I look for patterns and exploit them, unabashedly seizing any advantage I can get, and take a dim view of the idea that there is anything at all wrong with that.
Less-casual Board Games
Examples: "Battlestar Galactica," "Eclipse"
These games are typically very deep for board games, and a single game can dominate an evening. Again, this is usually played among close friends, family, etc.. Deception may be an explicit gameplay element, as in "BSG," (where the base structure of the game is cooperative but some players are secretly Cylons), but it's possible to approach it more ruthlessly or less. This is the level where "E-honor" first starts kicking in for some players-- unless deception is an explicit element, some people find it difficult to play "dishonorably."
Personal approach: I am, again, a ruthless bastard at games like this, though I understand those who prefer to honor their treaties, etc.. As a note, my reputation for ruthlessness in my circle of friends tends to make it hard for me to find allies, and often makes me the first to be suspected of being a Cylon even though the selection process for Cylons is random. (I end up feeling like Gaius Baltar whether I'm playing him or not.)
Pen and Paper ("PnP") RPGs
Examples: "Dungeons & Dragons," "Exalted," "Call of Cthulhu"
These are tabletop roleplaying games, usually with a time investment of hours weekly-to-monthly over a period of months or years. Play style is usually cooperative, and the use of "foils" within the gaming group (ala Belkar Bitterleaf, the Chaotic Evil halfling in the generally Good-aligned "Order of the Stick") is a tricky issue that has to be carefully watched. Character interests must usually align with the group; outright betrayal will often go over poorly. The game is usually played among pre-existing friends.
Personal approach: directly betraying your friends in this context can really get people upset; it's usually a tacit part of the game's "social contract" that the group ultimately works together despite differences in motive, philosophy, etc.. I've been experimenting with treacherous characters in this context without directly opposing, undermining, or destroying other characters' goals, and it's generally worked well, though my somewhat more conventionally-honorable housemate's grumbled, "Well played, you bastard," upon departure from more than one of our recent sessions has me thinking I may be walking a fine line on this.
Troupe Play
Examples: Live-Action Roleplay, especially Mind's Eye Theater "Vampire: the Masquerade," original "Neverwinter Nights" persistent worlds
These are larger roleplaying games typically involving no fewer than ten and no more than a few hundred players. Time commitment is similar to PnP RPGs. GMs can run storylines, and play can be cooperative, but most action actually comes from internal character-building, character interaction, and intrigue. As such, the intrigue is an expected component of gameplay; nobody is in a position to complain OOC when their character gets stabbed in the back by a friend. Indeed, most complaints in a game like this seem to relate to characters entering into unbalanced, unrealistic, and (especially) cheesy alliances based on the players' OOC friendships.
Of course, another problem comes in when someone can't separate the in-game backstabbing from OOC....
Personal approach: ah, sweet troupe play, how I miss thee! If you've never tried playing an evil character, this is the place to cut your teeth; especially in a game like live-action "Vampire: the Masquerade," nearly everybody's a predatory, scheming bastard. Much of the fun comes from watching various plots, schemes, and conspiracies interact. It's like having an evil ant farm. I eventually started playing honorable, principled characters in these just for variety's sake.
However, style must adapt to suit setting; not every troupe game is "Vampire," and in something like a NwN persistent world you need to be able to live alongside the good guys even if your idea of a nice morning is vivisecting puppies. This isn't a matter of OOC relations; it's a matter of being able to fit into the game's IC culture.
Fictional Universe
Examples: "Eve Online," other MMO's to a much, much lesser extent
Initial social context: arm's (or, rather, internet's) length.
Time commitment: it'll swallow every minute you throw at it and then demand more.
Facially, this is just troupe play on a massive scale. However, because of the depth of involvement needed to "build something" in game, once OOC social contact is made and an agreement to cooperate established (a necessary component in joining most corporations), the expected "social contract" shifts to more closely resemble PnP-- it's presumed that you're working towards the same, or at least compatible, goals. Even in a game as cutthroat as Eve, there is a degree of implied OOC trust in adopting a new member into a corporation.
Personal approach: I have long insisted on approaching this from a troupe-play perspective (what my character would do, I will do). However, in practice, no matter how hard I try not to form any OOC connections, they always end up existing, and people invest a lot of themselves, OOC, into their in-game projects (corporations, for example). It's very difficult to "do" intrigue without violating people's OOC trust. When Soter and I first set up The Synenose Accord, I even tried to explicitly set it up as a hotbed of intrigue (a sort of troupe game unto itself within the wider fictional universe). No such luck-- it ended up gravitating toward cooperative play rather than the backstabbing-cooperative I was aiming for.
Because of the implied OOC contract of cooperation and the time investment, I have ultimately concluded that those who betray their associates in Eve are in no position to complain if others take it personally OOC. It's like betraying the party in a PnP. People have put much of themselves into their projects, and expected you to have their backs; you should expect people to take it badly when you take "having their backs" to mean plunging a dagger between their shoulder blades.
However, because of the game's nature and especially the explicit allowance of such treachery, neither is it reasonable for third parties to draw harsh conclusions about the moral character of those who choose to engage in corp theft and similar shenanigans-- this is, after all, a game. We all knew its nature, and we've all known that there would be some who would choose to play off of our OOC implied contracts of cooperation rather than abiding by them. It's fair play, if not necessarily nice. I won't be hiring Smuggles, but I have no personal issue with his actions-- they're part of the reason I play this game.
For my own part, I really hate letting people down, so I play honorably vis-a-vis people who have formed an implied OOC contract with me. However, I have no problem with shooting people who have no OOC reason to trust me to begin with (as is the case among friends playing a board game). Hence the piracy and my taste for underhanded tactics in DUST.
