Ever get the feeling that someone is watching you? Well according to social facilitation this may not be a bad thing. Social facilitation states that people perform certain tasks better when they are in the presence of other people. It is important to consider in social situations, because it implies that people's performance does not rely solely on their abilities, but is also impacted by the internal awareness of being evaluated. This is true for simple tasks, tasks people are good at already, or already learned tasks, but not for difficult or novel tasks.
Whenever I think of social facilitation the first thing that comes to mind is the pacemaker or "rabbit" in track. The job of the pacemaker is to lead the initial laps of a mid-long distance race to ensure fast times and avoid excessive tactical racing. Pacemakers are frequently employed by race organizers for world record attempts with specific instructions for lap times. It is not clear when pacemakers first made their appearance of the running scene, but they gained much usage after Chris Brasher and Chris Chataway successfully paced Roger Bannister to break the four-minute mile for the first time in 1954.

I believe that just the presence of someone motivates our competitive nature. I know that I personally get a much better workout when I'm with someone. They help me keep my dreaming at bay and focused on the task at hand. More about social facilitation as well as findings by Norman Triplett can be found here.
I think that the comparison to the pacemaker is a very interesting one, but very fitting. I agree that the presence of another person increases performance. In my opinion this has a lot to do with the Yerkes-Dodson law, measuring arousal versus performance. It's much easier to get excited in the presence of another, thus increasing performance. This could also explain why people perform more poorly in the presence of a lot of people. A large crowd likely excites the individual too much, leading to decreased performance consistent with the Yerkes-Dodson law.