Children under 5 can be the worst with dogs. They do tend to go for the cuddle, they mistake the dog for a cuddly toy. The number of times I had to tell my niece and nephew that my puppy and myself were not their toys and would not what they want all the time. And definitely no poking in the eye.
And there have been studies that show children will lie from about as soon as they can talk. Eg they get left alone in a room with very tempting toy or bowl of lollies, and asked not to touch them. Very few children can do that. And a significant number of children at age 2 and over - can lie about it. They're sprung by a camera and one way mirror but they lie. A dog would be equivalent to a very tempting toy.
It may be that your son has not lied but that you have not asked the right question yet.
At the moment we still don't know how the child and dog came to be in the same place - unsupervised. And it could have been much worse. What if it was a swiming pool or pond.
page 2 of this seems relevant.
Why Kids Lie -- Age by Age - Parenting.com
I would be most angry at the friend for the lack of supervision. I would be fairly angry at myself for misjudging the friend's quality of care. It's a bit hard to judge the dog when you don't know what happened. Like the others said, it's likely the dog could have done much more damage if it was truly aggressive.
Here's another article about kids and fibs