Mudlark - don't feel bad. I've been singing for 20 years and making eye contact with a small crowd is still damned difficult! I don't think you ever get over it, just work around it.

I found this out again earlier this summer when we played a gig at an extremely small local coffee house with about eight people in the room. My band mates, who also sing, admitted they had the same problem. We discovered that we also used somewhat the same technique to overcome it - look slightly over their heads, or right at their forehead, not their eyes.

And the audience, of course, is already sitting there in nothing but their underwear!(if you're using "Speech 101" anti-stage fright techniques)