pcarfan,

I agree with ginagt that your dog may need more socialization. Some dogs are naturally more fearful than others and if your dog was abused at some time this could be a factor too.
My second dog came from a similar situation- we adopted her as a pup but not before she had been abused, and also she has a naturally shy disposition- and so it has taken quite a bit of deliberate socialization to get her where she is today.
What we did was introduce her to as many dogs and people as possible (in a non-threatening, controlled way) while she was still a pup and I also try to do so while she's an adult too by taking her on walks where she can meet new faces. She's done pretty well but she is still wary of kids; she will leave them alone but doesn't particularly like them until she has been introduced to them several times.
I'd suggest taking a look at some books or articles about how to socialize an adult dog. Here's a brief one:
http://dogs.about.com/library/topics/bltips006b.htm
I hope that helps. Good luck to you and your pup!

Pembroke_Corgi