Toph has stated that her seismic sense allows her to "see", but not visualize faces. Yet, in her first appearance, it is clearly shown that the vibrations she senses includes the face.
Also, in the third book, she was able to create a sand replica of Ba Sing Se, with precise detailing on Earth King Kuei's and Bosco's faces.
However, she does genuinely appear to have no idea of how she looks.
What do you think? I personally believe that Toph can see faces, but not perceive every detail. For instance, she may be able to tell that Foaming Mouth Guy has an open mouth, because of his exaggerated and emphasized facial movements. However, a slight smirk from Azula may remain unnoticed, as it does not really change the facial structure.