Rita Williams-Garcia (my first semester adviser) lectured on fictional truth and how it operates on a different plane than the truth of facts or non-fiction. People who regard fiction as something that's untrue, just made-up stories, don't seem to grasp that emotional truth is often just as important, if not more so, than the facts of the matter.
The core of the fictional truth is the reader/writer contract. The writer tells the best, truest story s/he can, and the reader suspends disbelief to a certain degree. If the writer violates that contract in the reader's eyes, the reader may put that book down.
I think that the main reason I stop reading novels is because of this breach of contract. I can suspend disbelief at the drop of a hat, but that disbelief is quickly reinstated if the writer gets facts wrong or even if I just suspect the facts are wrong.
I recently read the beginning of a novel whose parents are both US Army officers. They were both being transferred to South Korea and the girl refused to go with them. Well, for one thing, I really doubt that both parents would be transferred at the same time. For another thing, I don't think families are even allowed to go to South Korea and live with their soldiers. So right off the bat I was disinclined to continue reading.
Rita quoted John Gardner as saying that non-fiction is a "trivial kind of truth." I don't think that's a fair comment about all non-fiction, particularly creative non-fiction. Ultimately the facts alone don't tell the whole story or the whole truth.