I totally understand this phrase.  Sure, I don't like being on the other end of it.  But I'm a blunt person.  I like to be completely honest with people.  I feel that in the long run it makes things work more smoothly if you just say something rather than holding it in and letting it fester.  So I always try saying what I think/feel in a sensitive way, but some things just sound mean no matter how you say it.  So I add, "Don't take offense" or "Don't take it personally" or whatever to just kind of say to the person, "Hey, I don't want to hurt our friendship, and I'm trying to be nice about this, but I think it needs to be said."  I know the person will probably take it personally.  I just hope that by me adding that phrase that they understand I don't want to hurt them, but that sometimes its necessary to say something painful to help the overall situation.

If that made any sense.

Of course, some people really are just being assholes when they say it.  I guess it all just depends on your intentions.