Our blog friend Dr. X linked some more recent research about false autobiographical memories.
We Psychoanalysts know how much a person's memory is a story, and a story which evolves over time, both in detail and in theme. In psychoanalysis (and in analysis only - not in life!), we take the difficult and disciplined - but also luxurious - position of receiving memory (and everything else) as "text" or "narrative" in the pomo sense (although the technique far precedes pomo), and do not worry about its historical factuality because our job is to address psychological "facts" (see Spence and Wallerstein, or the wonderful Roy Schafer whose talk I attended in NYC last month).
In analysis, the potential power of that stance exceeds the power of truth-seeking in the everyday sense. We call it "psychic reality," and we confuse it with reality at our peril: in the human mind, belief, wish and fantasy often trump facts. Sanity lies in making those distinctions. My wise supervisor told me "When patients talk about the past, they are talking about the present. When they talk about the present, they are referring to the past. And they are always talking about the transference."
But that is analysis. In real life, as opposed to the somewhat strange "analytic situation," we analysts tend to be drawn to real hard human facts, like thirsty people on a desert.
That is why we often prefer Dickens and Melville to psychological studies or the New York Times.