Advice for entrepreneurs seeking investment: Pull your company's pants down

In the go-go technology markets of 1994-2000 and 2003-2008, raising money was relatively easy. The game had many players, and in many ways, it was an entrepreneurs market. During those markets, many entrepreneurs viewed getting financing as a subtle art of playing one investor or venture capitalist off of another (Note: I didn't view it this crassly but was aware of the strategy).  During these periods of time, It was common entrepreneurial knowledge not to tell investors your true cash position nor to tell investors exactly what investors you were pitching.
Now, it's 2009. In case you haven't noticed, the world is different.  The fund raising climate is very different and it's now much more of an investor's market.
I had a meeting with a couple entrepreneurs recently. They have a company with 6 employees, that generates about 20K per month in revenue and are trying to raise 500K at $3,000,000 pre-money. I thought they were dreaming and told them so.  In the interest of giving them productive feedback, I told them they shouldn't waste their time and investors time trying to optimize on a financing deal. 500K at 3MM is a non-starter for a 20K revenue per month company. The entrepeneurs have a good idea and need some cash. My suggestion to the entrepreneurs was to put their cards on the table in an attempt to get the cash they need to survive.
It's a bit counter-intuitive to let investors know your true business position and to show your weaknesses and limitations. However, if an investor is interested in parting with their cash -- and there are some investors out there still looking to invest (ourselves included) -- then, I'd suggest putting your cards on the table (i.e. tell the investor how much you need, what valuation you'd need, and how much cash is in the bank -- in other words, pull your company's pants down)  moves the financing conversation along the quickest to see if there might be a deal -- and finding out if there might be a deal is more important than optimizing on valuation. Period.. Make sense?