UX: Is it better to ignore errors or fail loudly?

This question came up in a discussion I was having with my co-worker Chris Brewer. Suppose /foo is valid, but the user asks for /foo/bar. Should we just show /foo, or show a 404?

In other words, which is better: being nice or failing loudly?

Superficial love or tough love?

Arguments for the former: Postel's Law. Null Object pattern.

Arguments for the latter: Throwing exceptions. Fail loudly.