Google is toying with the idea, but understands if it makes you want to wet your pants.
According to Hartmut Neven, Google's director of image recognition development (they have a director of everything, don't they?), the facial recognition technology to build such an app has existed for quite some time (think of the "faces" option in Google Image Search, for example), but Google is holding back because of internal debates over privacy concerns. Probably a smart move.
As potentially cool as this tech could be, breaking down the privacy barriers of everyday life is a lot different than, say, encouraging people to use their real names online. Think of what law enforcement could do with a facial recognition app like this, for example.
As facial recognition starts to gain traction, we're guessing the debates won't remain internal for long.