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Nick likes to tell us he's going to be a good narrator. He reports that he has a great ability in chapter 1 to "reserve judgment" and in chapter 3 that he is "the most honest person he knows."
I do think he reliably reports what he sees, but I think he has judgments in particular of the characters he interacts with. For example, I think he is envious of Gatsby for his material wealth, but also notices Gatsby's life is not whole. Likewise, he struggles with Tom, but maybe that's more because having married Nick's cousin Daisy, he has reason to be concerned about the way she gets treated. Throughout the entire story, he goes to great lengths to show how Tom's arrogance and relationship struggles make him think less of Tom.
He is a pretty reliable story teller because he is human. I would just his impressions as not suspect, but insightful. He sees people and being a sort of goofy guy himself he doesn't really have too much room to judge.
Nick in The Great Gatsby is a first-person narrator who is directly involved in the action. He's not one of the main players, but he's not just a distant observer, either. As an involved narrator, his perception is not totally objective. His perceptions, observations, prejudices, opinions filter everything he writes.
Nick tends to be judgmental and opinionated, for instance. When he opens the novel by announcing that he always reserves judgment and does not make first impressions, this indicates that he sees himself as superior to others. One doesn't have to concentrate on not judging others, if one doesn't judge others.
He reveals his judgments about Tom repeatedly during his narration, and even his first impressions express opinions, such as the first time he sees Jordan Baker and indirectly characterizes her as lethargic and stuck up.
That said, Nick is considered by most to be a fairly reliable narrator. There are those who see his portrayal of Gatsby as a "white wash," and feel Gatsby is really a pompous jerk and a crook with no redeeming qualities, but this is a minority view.
His view of events does not seem highly suspect, though it does seem to promote the Midwestern values he comes to the story with.
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