There is a genetic component to fear. Dogs who were born to and raised by fearful, anxious mothers tend to be more fearful and anxious themselves. Good early and continued socialization can help these dogs immensely, but they may always be generally cautious, nervous, shy or fearful.
Sometimes you can actually over socialize a pup. There is often a fine line between merely "coping" with the strange people/places/things that are presented to a pup in the name of socialization, and the pup actually enjoying the strange and new experiences. Some people inadvertantly and with the best intentions over-face their pup with socializing experiences and don't realize that their dog has been uncomfortable with things all along, until the dog is a bit older and has the confidence to react the way he is really feeling.
Alot of people realize how important it is to socialize a pup during the first few weeks it is at home. There is a window of opportunity, so to speak, that continues from birth to about 16 weeks where the pup is forming its impression of the world and the people and things in it. There is a fear-imprint stage that occurs around the 10th week. During this time the pup is particularly impressionable to experiences. However, most people don't realize that there is another fear imprint stage that occurs around the 7 month mark as well. It is important to think of this stage as a "second socialization time". All that possitive association work you did with your pup and strange people, dogs, etc. needs to be repeated or else you will lose it. Many owners begin to see aggressive behavior during this time and start thinking they have the makings of a horribly mean dog on their hands when in fact what they really have is an aprehensive adolescent who is desperately trying to make itself feel more comfortable.
I'm not saying that any of the above is the case with the OPs dog, but enough posters have the same issue that I thought it might be of benefit to explain a bit about socialization and the role it can have on your dogs future temperment.
Anyone with a fearful, shy, nervous, or anxious dog might find the following books to be quite helpful:
Help for Your Fearful Dog: A Step-by-Step Guide to Helping Your Dog Conquer His Fears by Nicole Wilde
The Cautious Canine by Patricia McConnell
The Guide to Living with & Training a Fearful Dog by Debbie Jacobs
Help For Your Shy Dog by Deb Wood
There is also a Shy K9s yahoo group for owners of shy, nervous, anxious dogs.