"Do you give family and friends a discount on your photography?"
That would be a no.
Immediate family being the one exception. I've found that when there is no "value" on my services, the clients treat it as such, even if I'd typically be charging several hundred for the services given. Curiously enough, I've found I don't invest as much creativity and skill in these shoots either. Probably a poor reflection on my motivation, but true nonetheless. So essentially, I have a quasi client, quasi product and ultimately quasi satisfaction. No raving fans. For all these reasons, I avoid discounted packages like the bubonic plague. I do occasional trades, but even that is rare, simply because I'm running a business and need to establish a cash flow.
The one exception, as stated above, is immediate family. For the obvious reason that I adore my family, love spending time with them and photograph them on a regular basis. It's just fun to hang with my nieces and nephews and laugh along with them...or smooch them all over, which is my tendency :)