Referring a friend for a job he might not be a good fit for?

I have a friend interested in a job at my company. He asked me to refer him to the hiring manager, but personally I'm not sure he's the best match. I think he's a great guy but the job is for a Sales person and he's pretty shy.

How should I let him down? Or, should I refer him anway?

I think honesty is the best policy. Let him know that he's not right for it but you'd recommend him for something else when it comes up. It's your rep on the line.