I would probably tell him that I didn't feel like I could be objective and suggest someone else who might be willing to take a look at it. I would not want to have to tell my friend that I'm not thrilled with his writing which is so important to him.

Of course, now that you've accepted it he's going to receive that as "I didn't care for it but I don't want to tell you," but that ambiguity might be better than putting it all right out there on the table.