The key question for you is what do you do when you're acting "shy"? Do you look away, look "inside"? In other words, is it obvious to an audience? If it IS, you should spend time in front of a mirror to learn how not to make it obvious.
Personally, I always look at individuals, regardless of the size of the house. If I'm playing for arena audiences, I'll pick out 5 to 10 people in different parts of the house to play to. My performances tend to be personal for everyone in the audience.
What I think you should do is understand that the really small audiences are usually the most vital to your ability to fine tune your craft at the stage you're in. When there are only a few people, remember they are hanging on your every note/lyric. For that reason, you have the complete freedom to do what you want. Experiment with a new versing of a phrase in a song. Throw out your arrangement (if you're a solo act) and try something totally different. If you try something a screw up, tell them about it. Depending on who you really are as an entertainer, it might open up a whole new persona for you to explore. You know, the VULNERABLE one...
Small houses make for big advances in your style and self-confidence. Embrace them whole-heartedly!