Becky, my DS is also like that, i allways think of him as an observer, but it did used to bother me that every people we used to meet, they allways said to me "Ohhh, your baby is SSSSSSSSSOOOOOO serious!!" and it made me mad to hear that! i know he doesn't laugh and smile as other babys do, but he is a total angel. I do undestand how you feel, 'cause that has also been on my mind many times, but i guess we need to accept the wonderfull little person who is our baby, just the way he is! all i can say is that my LO is almost 6MO and he has started to be more outgoing with people, he smiles a lot more, and i have only heard him laugh hard like 6 times, but i know there will come a time when he'll laugh more, and i love to see him develop.
I do find that when is more around people he does socialize a lot more, but i also don't go out that much and i know i need to do that more often. I have noticed that he get really curious when other children are around (like my nieces) so i will try to get him out more too.
Have you tried a mommy and baby group or something?