General rules of etiquette states that if you have no idea who a person is, it is better to admit fault than to hazard a guess. Lower the blow of your inability to remember somebody's name by remembering and stating something you know about that person ("We met at Krissy's party. You liked pie right? I'm sorry but I forgot your name").

It doesn't happen to me because I don't keep many friends in my company. The worst case scenario is if some misc member from my high school appears out of nowhere. I don't/can't be bothered to remember them all. Oh well. I didn't like them anyway.

Also I don't usually use people's names in conversations. I just say "hey" and "excuse me" and stuff like that. Never "Hey Jimbo, wanna pie?"