Question: How did the witnesses think that it was Bill and Stan who committed the murder? Didn't they even see the faces of the other killers after them?
Answer: The witnesses saw two young men in a very similar car to Bill and Stan's drive off. The prosecutor made a compelling case that they were the murderers, while Vinnie initially bumbled. In cases like this, it's somewhat easy to convince someone to believe they saw what they want to believe, especially if they feel they're doing a civic duty or if it makes them feel important. See the play 'Twelve Angry Men' for an example of this.
Answer: One more thing to add: At the end, when Sheriff Farley announces that the real killers have been apprehended, he says they look just like Bill and Stan.
Answer: They saw hardly anything at all, but they are convinced somehow that they saw these 2 boys and not someone else.
Answer: This is actually fairly common in real life. It goes something like this: the witness sees two men in a green car fleeing the scene of the crime. Later they learn two men driving a green car have been arrested for the crime. In their minds, they saw these two men, and as time goes on they subconsciously "see" them in their memory of the event. This is addressed in the film. Vinny even questions one witness about that, asking if it's possible that they just saw "two guys in a green convertible, and not necessarily these two guys."