Honesty is DEFINITELY the best policy. Say that you would, but you're thinking of asking someone else. It'll let her know that you're being nice, but not that interested. Be nice though, because just imagine you were her.
Also, you can ALWAYS go to the dance with someone else as long as you didn't lie and say "I can't make it" cause then she'll think that you'd go with her if you could go and once you show up: major drama!
Hope everything goes okay!