No, those LDS members were not lying to you. The Church has just officially changed it's position on caffeine. For decades, the prophets and general authorities of the church publicly forbade it's members from drinking caffeine as being against the Word of Wisdom. Allowing it now, is a new evolution in the Church's official position.
Previously, the leadership of the church publicly and privately admonished the members to not drink caffeine. (Yes, members used to be denied temple recommends for drinking caffeine). However, in the last decade or two, the church has backed off of it's original public stance against caffeine and had begun sending mixed signals by refusing to announce any change in the Church's teaching on the topic, while in private correspondences telling members that it was ok to drink.
Almost all of the membership were taught that drinking caffeine was a sin up until about the mid 90's when the church started reversing course on the subject.
The reason for this reversal in the Church's teaching on this stance probably has much to do with the rapid influx of converts during the last few decades, particularly from 1980-2010. In 1980, church membership was about 4.6 million, in 1990 it was about 7.8 million members--that represents a growth rate of 70% from1980--, in 2000 membership was about 11 million, and in 2010 it was about 14 million. This growth thus represents a 300% growth rate in new members over a thirty year period. Many of these members were converts. With such a rapid influx of non-mormons into the Church's membership, such a change in Mormon culture and teachings was almost inevitable.
In addition, much of the growth during this period was from converts. Since much of the LDS church's membership is now made up of new converts, and many of those converts since about the year 2000 probably didn't even know that caffeine was taught to be against the word of wisdom, it is no surprise that the Church would change it's position on caffeine. As these members become more integrated into the church, and take up leadership positions, the old guard against caffeine is gradually replaced by the new guard who no longer condemn the use of caffeine.
I wonder how my Grandfather maintained his membership in the Seventy while drinking coffee, with canned milk no less, same on his oat meal, horrid stuff.