The New York Times has a short-but-sweet article on the social function of blushing, looking at several studies that have found that a flushed face has a placating and cohesive effect on those around us.
The article reports on studies where blushing has been found to soften other people’s judgements of bad or clumsy behaviour and subsequently reinforces social ties.
Interestingly, it’s not just when someone makes a mistake, one study looked the effect of blushing on friendliness after a blokey bout of name calling and piss-taking:
In a 2001 paper that contrasts teasing and bullying, an act of aggressive isolation, Dr. Keltner and colleagues from Berkeley discuss one experiment in which members of a fraternity at the University of Wisconsin came into his lab, four at a time, to tease one another, using barbed nicknames. Each group included two senior house members and two recent pledges.
The young men ripped each other with abandon, calling each other “little impotent,” “heifer fetcher” and “another drunk,” among many other names that cannot be printed. The researchers carefully recorded the interactions and measured how well individuals got along by the end. The newer members were all but strangers to the more senior ones when the study began.
“It was a subtle effect, but we found that the frequency of blushing predicted how well these guys were getting along at the end,” Dr. Keltner said. Blushing seemed to accelerate the formation of a possible friendship rather than delay it.
Link to NYT piece on blushing.
Mind Hacks 
Well that’s a relief since I blush easily. But isn’t that also a function of skin tone?