I've participated in the birthday celebrations of two friends recently. It got me thinking: what is proper to do while singing happy birthday to the person? The way I see it, there are two options: 1) stare somewhat intently at the person while singing making that person uncomfortable, or 2) look around the room at anyone or anything except the person to whom is being sung happy birthday.
Option #1 has the added disadvantage of making oneself a bit uncomfortable as well (at least, that's generally my experience), while option #2 makes onself look a bit silly, but tends to eliminate most of this discomfort (again, that's in my experience).
I wish I could better remember participating in this activity as a kid. I think it is different when one is younger, though I still vaguely remember staring around the room a lot.