In Oblivion aren't all the faces randomized to be different?
Technically, every NPC has a unique face, but I can sort of see the problem here. Individual faces tended to not really feel that distinct, and while I could often tell who was who as long as there weren't too many NPCs of the same race in the same city, if the game had more NPCs, I could see this becoming a problem, as eventually, different faces might just start to kind of blend together. Still, it was better than Morrowind, where due to the use of preset faces, a lot of NPCs DID in fact have the exact same face.
Hopefully, though, Bethesda's experiences will help them craft more distinct NPC faces in Skyrim. The fact that there's now room for variation in body shape as well as face should also help a lot, I think.