[carlyle4545]

This reminds me of the awkwardness of seeing someone you sort-of know in passing and deciding whether to stop and chat with them or just say "Hey! How ya doing?" and continue walking.

The "stop and chat" dilemma immortalized by Larry David: http://www.youtube.com/watch?v=5f2LJXz-l2k

[claudius]

"Hi" and a smile/nod appears perfectly appropriate. But it certainly depends on the cultural background.