It doesn't seem like it would be too hard for Facebook to implement facial recognition. It's clearly not a trivial issue, however they certainly have the data, servers and intelligence to do it right. After all, they have a list of everyone you come in contact with (as well as friends of friends), along with anywhere between a dozen and a thousand tagged pictures of each.

EDIT: In reply to the poster below me- of course, autotagging wouldn't work. I was thinking more of a "suggestions" implementation.