Lori,
I think one of the toughest thing to do is go up on stage in front of an audience and play. Like all the people say, practice makes confidence. Play in front of small groups, and ramp it up. I started out playing folk stuff in front of my friend I wrote songs with, and I was really nervous in front of him. Then, the more I did it, I got used to it. Now, it's been 14 years now. I play at my church that has a audience of 400+ for 2 services, and I sure the heck can't drink beer to loosen me up either. :p But I have absolutely no problems. If I mess up, well, I have my band to cover me up. But then again, when you're playing lead guitar, you can't hide well... :rolleyes:
One thing that helped me is to play the song that you're going to sing over and over until you feel comfortable not looking at your fingers, and you can close your eyes singing. Heck if you can head bob, or head bang, that's even better. The more animated you get, usually means that you're getting comfortable with your playing, and that's one less thing to worry about when you're up there. If you mess up, make a good one. We ALL have those stories. :D