Just be honest. It's easier to say "Oh, I've found someone to go with. I'm sorry- I was quite looking forward to going with you." rather than going with someone you don't like and leading them on to think that you might like them.
Get one of your friends to ask the girl to the dance, if you want to be extra nice.
Get one of your friends to ask the girl to the dance, if you want to be extra nice.