Better to be honest than have people just think you're incompetent. I had some hesitancy in telling people this as well. What I discovered was most people were either understanding veterans who were happy to help new players or they were new players themselves.

If people call you a newb, they're probably assholes, and will most likely do stuff like blame people for wipes, make assanine comments about your gear, and generally be counterproductive to working as a team. You can always teach a new player how to play but you can't teach a jerk how to be nice. If you find your in a group with these kind of people, just leave and let them figure out why.

Surrah:

Peronsally I wouldn't use the phrase "I am new to the game". Saying this almost says to people that you don't know your class or you don't what threat means or how to manage agro or even how to 'get out of the fire'. Most players - even new ones, understand these concepts. So if your doing a quest or an instance with a group, I would state when you join them something like:
"Ahh, I have never done this isntance(or quest) before, so don't be afraid to yell out anything I might need to know"

Most people respond to this by typing in a sentence or two before a boss or a gauntlet area or a nasty pull just outlining anything important. This is helpful for you and at the same time, you have prepared them for the chance you might make a mistake.

Peronsally - I am always happy to give new players tips, or spend 30 seconds outlining a boss or even showing them where a quest mob is; as long as they ask and are polite. What I really really hate is people who put themselves in ques for an instance or raid and don't have the knowledge and often the gear to do that instance/raid. Most of these people know they don't but do it expecting to be carried. Its these type of people that turn older players away from helping the geniune new players.

S.

IMO, tell the group you're fairly new. If you wish, feel free to tell them that you're not a total nincompoop as well. Don't just say "I've never done this instance/quest" if you're new, because that implies that you're experienced overall. I've had lots of people claim to be experts but "new to this dungeon" then they'd wet themselves if they get hit by Divine Intervention and immediately cancel it.

If jackass members are gonna be "LOL NOOB GTFO MAH GROOP" about it, then you're better off anyways. I never mind giving tips to players who mention that they're new, explaining boss strats or things that people have to avoid.

Don't lie or try to fake it silently. With the new achievement system, we can tell if we care to look. Chances are, if I'm running a 10-man raid pug or something, I've checked everyone's achievements on the armory. The statistics section even goes so far as to say how MANY times you've killed a particular boss.

It doesn't take much. When I was gunning for my Champion of the Frozen Wastes title, I was confident in my abilities but humble enough to say something like "I haven't done this instance before, but I pick up fast. Just tell me if there's a quirk I need to know about." Anyone who doesn't understand at that point is just being an asshat.

I would say yes. Even at level 80 I will still tell a group when it is my first time in an instance, usually one of the other players will give you a little plug abut the fight before you start. Which can make the difference between dieing 30 sec into the fight and living to the end.

What the others said: just come out and say it. "I'm fairly new to the game. Is there anything I need to know before we start this?" or "I've never been here/done this before. Is there anything I need to know?" If they treat you poorly and call you demeaning names, those aren't people you should be hanging around anyway!