My daughter's biological father was in the picture on & off after we left him when she was about 2 months old. He saw her a few times a year until she was 3 & hasn't seen her since.
Madison knows him by his first name, and knows that he was her "first daddy" (she considers my husband her daddy now, which he is...the one who fills all the daddy roles). She knows that he didn't want to be a daddy & that's very very sad; but it wasn't because he didn't love her or because she was "bad." It's because he was selfish & just not a very good guy.
I don't malign him to her, but I don't sugar coat it. I don't think telling a child that daddy went away on a business trip or vacation or whatever is such a great idea, as it may leave the child hoping for a return. Or totally freak her out if mommy/grandma/etc really does have to go on a business trip!
I think honesty really is the best policy. The child certainly shouldn't know all the details, infact the fewer details the better, but I'd suggest you have your friend be gently honest. And to let her daughter talk about it whenver she wants, answer her questions. Madison has her daddy, but she still asks about Ryan sometimes. And sometimes she's sad about it. It sucks, but that's the road we chose when we hooked up with guys we shouldn't have! ;)