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Many famous authors have made their names on lightly fictionalized versions of their own lives. This is called autobiographical fiction, and it underlies books from To Kill a Mockingbird and David Copperfield to Fear of Flying and Zen and the Art of Motorcycle Maintenance. Consider also the movie, Almost Famous, with a similar theme as your own work. It's presented as fiction, even though it features real people, and is transparently based on the life of the famous writer/director who created it.
The big advantages are that you can rewrite history to make it more entertaining, you can combine characters to make them more interesting, you run less of a risk of libel suits or legal culpability (for illicit activities, such as you mentioned), and you aren't constrained by the facts. You also don't have people waiting to catch you out in lies.
Given that fiction generally sells better than autobiography, except for the truly famous, I would suggest that your friends are correct that you would be better off changing a few names and calling this a novel "based on true events" rather than an autobiography. (About the only person I can think of who became famous primarily through straight autobiography is Maya Angelou, and she's perhaps a unique case.)
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