Playing in front of people can definitely be nerve racking! I'd expand on Kasperow's first suggestion and say you should be able to play the song on autopilot - you should know it frontwards and backwards. So pick a song you know very very well. Practice playing it all of the way through. People tend to practice parts - be able to play it all of the way through cleanly. Practice it as you plan to perform it!

Also, be easy on yourself. If you mess up, it isn't the end of the world. Keep things in perspective - you aren't trying to save the planet from iminent peril, you are performing a song. Pull it back together and move on. If you can play it on auto-pilot, this is easier to do. Many times, your audience won't know that you messed up, though it may be glaring to you.

Getting going is the tough part. Once you get started, forget about the audience - let yourself get absorbed in what you are performing. You'll find you relax at that point...it may even become fun :-).

Once you get your first success under your belt, it gets easier.

My experience playing in front of people was in a church contemporary choir. Once I played solo to support the singers. I was SWEATING bullets! My heart was pounding as I started. Once I got going, I found I relaxed and it was actually fun! I got a huge sense of accomplishment from it - it was a great experience.