You should. You're at a disadvantage if you don't, because everybody else sure does.

You don't need to lie, but you also don't need to disclose every single thing to your new employer. If you had a short stint at a company, just leave it off. If they ask, just say you took some personal time to figure out what you wanted to do next. I think that's a totally valid description of trying a new job that didn't work out. I know a lot of people who have taken years off for fun. No one questioned it.