Based on rants to various people and their responses, everyone seems to agree that, in principle, it is still good manners to greet every Jew with Shabbat (or yom tov) good wishes. However, in practice, this can be difficult when you're seeing 60 people on the way to shul and you don't know 4/5 of them. In a small community, you'll likely know (or at least recognize) almost everyone you might give good wishes to. In large communities, the greetings get more awkward both because of the number required and the increased stranger factor.
And who goes first? It's a vicious form of chicken. "Is she looking at me? Should I say it? Will she say it first? Oh crap, I think I just heard her mumble it! CHAG SAMEACH!" after she has already passed you by.
Adding an even further wrinkle into this conundrum of awkward is when the two people approaching each other are of different genders. In some communities (or as individuals), men may not give a greeting to a woman or respond to a greeting from a woman. In my own community, I have had awkward situations where I've greeted men with Shabbat shalom and they've looked at me like I've slapped them. You can't always tell by clothing which people will take it poorly. In my experience, the yeshivish and chassidic people in my community are generally very happy to return my greeting warmly. But you always run into people who feel my behavior is untznius. This makes me even more nervous to speak to a stranger when I can't predict who will have a bad reaction.
So what do you do? When I lived in small communities (or was traveling abroad), I was excited to wish everyone a Gut Shabbos, but now that I'm in the NYC area, I find that I mostly give strangers awkward smiles and then quiet good wishes if they look friendly. And many times, I just look away and keep walking, just like everyone else. I think that's not right, but some days you just don't have the strength to put yourself out there.
Any particularly awkward stories you'd like to share? Or ways to deal with this without constantly doing the awkward turtle?