This is something i had started doing with my boys when they were just about one and over time we have made different variations.
Initially, for the twins i made a couple of simple story books about themselves, but which had photos of immediate family members. So we would read the books together and the boys would be super excited about seeing themselves in a book. (i actually put the books together and got them printed from zoomin.com – so they looked like real books). They loved to identify themselves, my their parents and grandparents in the pictures.
Later i took it a step further by making a couple of photo albums with pictures of immediate family as well as a few cousins and friends who they see on a regular basis. We would flip through these and talk about the people in the pictures. (i recommend a good sturdy album for this- it will see a lot of wear and tear).
As the boys neared 18 months, i started creating groups within the pictures. So they knew that my parents and brother and sister in law formed some sort of unit – they all lived in the same place. Our cousins were paired up with their spouses and kids, the same with our close friends. This was fun for them and it also helped them remember names and faces of people who they were likely to meet and interact with. We slowly added other cousins and friends who we were close to but who the boys did not see that often.
Now we have a few variations:
I ask the boys to identify people
I ask them where they live (or vice versa – i ask them who lives in Pune)
I ask them to match the families – so i pick one person from the pics and ask them who her son is).
The boys love doing this. They enjoy looking at pictures and i have got some of them laminated to withstand the constant use. It has helped the boys recognize and remember people ..usually before someone new visits, i show them pics and tell them some little anecdote about the person and i find that they are more comfortable with visitors when we do that.