People are important and if they suck you are doing them an injustice by not telling them so, especially if they REALLY suck.

Now if they are have potential, then let them know it and by all means encourage them. But if the music is playing in the key of A and they are singing in anything Bb or higher tell the truth , man. I'm not saying to say it meanly, but find a way to say it truthfully.
They need to find a different way to express themselves.