The Answer is in the context
In general, one should never take one verse of Scripture out of context and formulate a doctrine or plan about it. The Bible is not a collection of verses � in fact, the verse and chapter divisions didn't appear in the original texts � but it is a collection of books. Technically, the context of the Bible is all 66 books.
Romans chapter 3 is in the middle of a discourse dealing with the issue of Jews and Gentiles in the church at Rome. The early Christians were predominantly Jews who had some issues with Gentiles coming in who didn't follow all of the Jewish law. This was part of the issue Paul had to deal with.
At the start of chapter 3, Paul anticipates the thought that may have come from his readers, that being a Jew wasn't important anymore. He then addresses the notion that, if our unrighteousness shows God's glory better, then we shouldn't be punished for our sins (Romans 3:5). Paul isn't saying this is so, as you'd see in verse 6, but is rather addressing a question that some may bring. Paul continues on, through verse 7 and the majority of the chapter, dealing with the idea of sin. In a nutshell, the law of Moses defined what was sin for everybody, not just a few select individuals, and that every person has missed the mark (3:23). BUT all sinners can be justified freely by the grace of God through redemption that is in Christ Jesus (3:24). He then expands on this idea.
In short, there are no lies in the Bible, other than lies that are quoted or echoed from the mouths or thoughts of sinful man or the great deceiver, Satan. In order to identify correctly what is being said, though, one must read more than a single verse. Reading one sentence of this somewhat lengthy response won't provide all the answer; most people would expect to have to read the whole thing to hope to understand what I'm saying. The Bible should be treated no differently.
The context seems different to me than the above poster..
3:7 For if the truth of God hath more abounded through my lie unto his glory; why yet am I also judged as a sinner? (3:7-8)
Although it isn't entirely clear to me, Paul seems to be saying that it is OK to lie, even when it produces a good result. The ends do not justify the means.
3:8 And not rather, (as we be slanderously reported, and as some affirm that we say,) Let us do evil, that good may come? whose damnation is just
At the risk of making this come off like a discussion...
The context of any Scripture goes far beyond the verse after it. The context for Romans 3:7 is the entire book of Romans, at a minimum, or, better still, the entire Bible. One can pick out individual sentences or verses and make it seem as though it says whatever one wants it to say, but that doesn't mean it says what you think it means.
Let me also suggest using a translation more modern than the KJV, as a more modern translation can use more reliable sources (sources found since the 1600's) and doesn't require translation from 17th century British to 21st century American. (That's assuming the reader is American.)
"The Context of the Letter to the Romans"
The context of one biblical selection cannot encompass the entire work of the Bible unless it is shown that the entire collection of biblical literature was authored or even edited by the same individual or group. That is not the case, since we are aware the Bible was written, edited, and compiled over lengthy stretches of time by many different people and groups. If you take the entire Bible as the parameters for the context of a single sentence found therein, then you will have to allow that God and/or God's faithful have sanctioned deceit in the furtherance of God's will. The only fair measure of context is the letter to the Romans itself. However, we are fortunate that Paul himself brings up the deceit of biblical characters thereby establishing a broader context for us.
Paul's major concern in the letter to the Romans revolves around "judgement." However, Paul says that he and all believers are no longer justified by their actions, but by God's grace. It is no longer necessary to obey Torah to please God, indeed, it is impossible to please God through obedience to Torah. Paul brings up Abraham early on. Abraham was the man who lied to the king of Egypt to save his neck, but whose lie nearly led another man into sin. It wasn't Abraham's actions that justified or condemned him in the eyes of the biblical authors, but his faith in the ultimate outcome of God's will. Paul is definitely comparing himself to Abraham. He most certainly believes that faith in the ultimate will of God is more important than any of his actions might be.
In chapter nine, Paul again raises the issue of his believability. Even a casual reader will get the impression that Paul might consider himself known for lying such that he felt obliged to clarify the validity of his words. This may or may not be the case, but again, he hearkens back to another Hebrew allegory in the story of Rebekah and Jacob where God's ultimate will could only be fulfilled if Rebekah and Jacob deceived Isaac. So, if the context is the letter to the Romans, then there is an argument to be made that Paul in chapter three and verse seven did mean what he plainly wrote, that it's acceptable to lie if God's will is the goal.