The imperfect indicative form is used to refer to past actions which occurred repeatedly, or which occurred over an extended period of time.
The preterit or simple past simply denotes a past action or state.
In many cases the two conjugations are both grammatically valid and may not differ greatly in meaning. For instance:
Todo fue una gran mentira.
Todo era una gran mentira.
However, they are indeed different tenses and they have different meanings. Which one is more appropriate depends on what you are trying to say.
Consider the following sentences.
Ella corrió 60 metros en 7 segundos.
Ella corría 60 metros en 7 segundos.
The first sounds like an amazing accomplishment by a sprint runner that probably broke a world record for women.
The second sounds like a very far-fetched tale about a person who was able to run at record speed on a regular basis.
It's technically the same with the verb "ser."
With the preterit there is a sense of finality.
As Gorpik correctly pointed out, "fue" connotes conclusion in a way the imperfect indicative would not have.
I would add that a closer translation of "todo tiempo pasado fue mejor" would be "any past was better."