The One With The Ballroom Dancing - S4-E4
Revealing mistake: During the end bit, before we get to see Phoebe when she is being interviewed at Lara and Jeni's Massage, if you look closely at the name of the massage parlor, you'll see that, although the camera shakes and bumps, the words stay on the very same spot on the screen. Obviously the canopy was blank and the name was digitally added later.
Answer: The statements that she's contradicting (that it is common, it happens to every guy, and it's not a big deal), are the things that a woman commonly says to a man who is suffering from erectile difficulty, typically to assuage his bruised ego. However, most men do not believe that these statements are true, as evidenced by Chandler's outburst. He's so caught up in the proof that women are lying about it that he gives himself away.
Rooster of Doom