In the recent New Yorker, I really enjoyed Face-Blind, an Oliver Sacks article on prosopagnosia, or "face-blindness." Mostly because it gave me a name for something I suffer from, though quite mildly, less than the depth Sacks describes in himself. (The entire article in not online, but you can hear an audio interview with Sacks.)
I have known for years that I have trouble placing faces, and I have also (as Sacks describes) been thought rude or stupid because I avoid guessing and immediately ask people, "I'm sorry, what's your name?" I'm afraid I insulted someone quite recently when I didn't recognize her, though I'd seen her just a week before. Once, I introduced myself to a new employee who, it turned out, had not only been there for months but had already had at least one substantive conversation with me. He seemed upset, as if I'd betrayed our new friendship.
I fall into this confusion during movies quite a lot, mixing up similar looking characters, especially if people all have identical hairstyles, like in military boot-camp scenes or historic Japanese films (Toshiro Mifune is almost always distinct, as in this scene from Sanjuro, but all the young nobles are frustratingly similar).
Also interesting in how this is related to the issue of "All _____ look the same to me," pick your ethnicity, because the ability to differentiate faces might get programmed, to a greater of lesser degree, in our first couple of years, depending on which kinds of faces surround us as infants.
Of course some people deviate in the other direction -- they are the "super-recognizers," and this trait may not be limited to faces. I have friends who are expert birders, and they have trained themselves to see subtle nuances that are lost on me. Which reminds me of Mark Bittner, the subject of the movie The Wild Parrots of Telegraph Hill, who recognized and named individual birds in a flock of 80, something field ornithologists never get to do. On the other hand, Sacks mentions Jane Goodall's difficulty recognizing individual chimpanzees, which seems entirely understandable but it turns out she also suffered from mild face-blindness among her human colleagues.