We can't always publish what we'd like to say. I try to write without inhibitions, but during the editing process I spend time obfuscating the characters. I change names, alter physical characteristics, switch locations. Often, I will change the dialogue so that words come out of different people's mouths, so that it fits the narrative flow better. Even with all of that done, I may ask a person who plays a major part in a story to read it and give their approval. More frequently than not, they say yes. Except for the time that I unwittingly uncovered a friend's affair.... but that's another story :)
There is a fantastic piece of writing on this topic at the beginning of Dave Eggers 'A Heartbreaking Work of Staggering Genius', and I would highly recommend you sneak into a book shop and read everything up until Chapter 1 where the real story starts. (I'd also advise you to buy the book after that, and read the rest at home).
This month, I was contacted by one of our winning writers, who asked me not to publish a winning story (correctly, in my opinion) as real life and fiction had overlapped in an unfortunate way. It's tough as a writer to see our work sitting on a laptop instead of published, but equally we have to respect the people that we honour in our writing.