Kindred, your fear of people is connected with your sense of self-esteem. If you have low self-esteem you will think you're below others. There is no reason to think this way mate. You need to think about yourself in a positive light.
You may think so many others are better than you, but why? It's the simple things that marks the character of a person - friendliness, kindness, laughter, empathy, humility etc. You may be a shy person, I don't know, don't know you from a bar of soap, but I bet you have some of these characteristics, or other positive ones. You need to appreciate this side of yourself.
You may not be a stud, might not be able to squat 250kgs, might not earn $250k a year, have flashy things, large social group etc but not many people do. The reality is that there are HEAPS of people out there that have insecurities about themselves. Not everyone reveals them so obviously though.
Some of the people who you just take for granted are better than you might actually be asswipes, might bash or cheat on their missus, beat their kids etc. I remember there was a very senior executive I used to work with, I looked up to the guy, thought he was better than me. I found out later that his wife left him because he used to go and pork tranny prostitutes. It made me realise I shouldn't just assume people are better than me.
As you get older you will get more comfortable in your own skin and learn to accept and appreciate yourself, and think better of yourself. But you shouldn't wait for that to happen naturally. I'm betting you have a lot of inward analysis of your problems. Shift the focus of that analysis on to your positive features.
Also, I'm assuming you don't have a girlfriend, though I may be wrong. If you don't, try and find some activity/hobby/club that will increase the odds of you meeting a lady. This will help to make you happier, but you need to be happy within yourself first.