if they want to stand there and watch me, so be it
i have a job to do and i do it, if they want to watch and talk then i work and talk back. If i'm working on a tedious part that requires all my attention i usually just say i need to concentrate on this and i can't talk.. they usually understand and most of the time they back off. On occasion i have had to remind the customer or observer i'm charging by the hour and anything that delays me only delays the repair, that usually works too.
edward's idea about blowing off the truck is a surefire way to get them to back off, nobody likes breathing the dust and dirt that comes off these things generally.

I'm reminded also of one incident where i had a customer hovering over me and asking questions when i was working on a hydraulic system, i was testing the system looking for leaks, well it happened to be one of the auxiliary lines in the mast, he just happened to be standing in the wrong place when i pulled the lever. I told him to stand back but he didn't listen, well... he immediately got sprayed with hydraulic oil even after my warnings. Needless to say he never came around much after that and let me do my work.... hehe :)

But all in all, i do try and be nice to the customer and if there is any safety hazards that may put him in harms way i do inform them of this, they usually stay clear or leave me to my work. I don't mind if someone talks to me, i just continue on while i talk.
I've found some tech's dont mind conversation or others watching, and other tech's seem to be uncomfortable about it.

Just remember to keep safety in the forefront of the job, if your uncomfortable with them standing over you or talking to you? then tell them you need to be able to concentrate on the job but be tactful about it if you want to continue to work there. If you've done field service work very long you learn how to read people so just use your best judgement when dealing with them. Keep in mind though there are some customers out there that are just a pain in the rear and you just have to deal with it the best you can.