Last weekend, I attended a writers' conference, where I was asked to evaluate the book ideas of about 20 attendees. I listened while the writers read the "pitches" for their works-in-progress. Most were novels, but there were quite a few memoirs. I found myself telling some of the novelists that they should consider turning their novels into memoirs and telling some of the memoirists that they should consider writing novels. Why?
I can't say that there are any really invariable rules about why a story should be told as fiction or non, but we've all learned some things from the James Frey and other literary scandals of the past few years. If a story is too good to be true, then it's wise to put the words, "A Novel" on the cover. If you call it a memoir, but you've embellished a lot, you're mislabeling a product, and no consumer wants to be misled.
Sometimes a life story can be just too rich -- filled with too many characters or incidents -- to fit neatly within the category of "memoir. " Those stories can benefit from the kind of imaginative editing and reshaping that goes into creating a novel.
Readers will always be hungry for stories about the lives of others, whether they are real or invented. Sometimes the trick is discovering just what kind of story you are telling.