Well, the "unofficial" explanation is that Bond did not recognize Blofeld because Blofeld's had plastic surgery (as referenced in the script- though admittedly it only refers to Blofeld having had surgery on his EARS), and Blofeld doesn't recognize Bond because Bond was "disguised" as Japanese in YOLT (though admittedly, that was an exceptionally unconvincing disguise).
The "REAL" reason is, of course, that they shot the books out of order (and kind of threw off the whole series in the process, but let's not get into THAT right now!)