If you're running iLife '09, fire up Software Update, because Apple has a bug fix update out for you. iPhoto 8.1.1 "addresses issues affecting face recognition performance and accuracy. It also fixes minor issues in the areas of book ordering, and iPod touch support."
There's an extra step for getting Faces recognition working properly if you imported pictures in iPhoto 8.1, which Apple details on the support page for the update:
iPhoto Update 8.1.1 is a 12.5 MB update available now in Software Update.Important: If you imported photos of people while using iPhoto 8.1, there's an extra step you should take after installing the 8.1.1 update. Select all those photos, Control-click to open the contextual menu, and then choose Detect Missing Faces. This will redetect the faces in those photos and correct any face recognition issues introduced in iPhoto 8.1. You should not quit iPhoto during the Detect Missing Faces process.