In XML, the standard/recommended way to indicate that the value of a particular XML node is NULL, is via the notation [xsi:nil="true" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"]. If any standard XML parser comes across this particular notation, the element which contains the aforesaid notation is treated as an element with NULL as its value. This is particularly useful, when there are values such as "NULL" (not the actual NULL but a string containing the characters, "N","U","L","L") as there's no way to distinguish the real NULL values and "NULL" character streams.
Therefore, the best way to handle this scenario would be to check for @nil attribute at client side while parsing the JSON content that returns as the response of the web service invocation. Alternatively, you can add an XSLT transformation at the data service query level to transform the response (in XML format which gets processed internally within DSS before returning JSON content) the way you want so that you'll be able to add any custom rules and transform the response before it is returned to the client side. You can refer to the sample data service named "ExcelSampleService.dbs" located in "DSS_HOME/samples/dbs/excel/" directory in the product package for an example on how this is done.
Hope this helps!
Regards, Prabath