If he had told them that everything was a sham, the world would have erupted into pure and utter chaos, and Sin definitely would have destroyed everything. The entire world structure would collapse; imagine the Dark Ages, only this time, it includes the Americas and the Far East. Not only would you repeat a needless war, but you have brought a third party into it, one that is inherently destructive.
Erk! I feel such a bad person for suggesting it! But suppose the machina had at least destroyed Sin and YY first. Even rampaging machines like VG would have been better than the cycle of death endlessly repeated. After all, with machina, you can just shaky-shake up to them and take em apart!