I agree that making statistics personal/relevant is important, but that's not ultimately going to dispel the fear of the student. I think how the student feels about something often has more to do with the personality of the person teaching it, and how comfortable that person feels in the classroom, even when teaching uninterested or scared students. The first thing to do to do away with their fear, is to do away with your own...you shouldn't be afraid of teaching students who may be afraid, because ultimately counseling them over their fears isn't your responsibility. You are not a therapist. And yet, by being natural, fun, casual, corny, and likable, the student will be able to let go of their fear as they can begin to replace their feelings towards statistics with their feelings about you as a person and the environment of curiosity, fun, and learning you create.
That's my belief and experience.
So, here's what I recommend:
Reframe Statistics using mantras like "Information is Beautiful" and show them the blog of the same name. Mention things like how "measuring something allows you to manage it" and make wiser decisions. Yes, these are all ways of making it personal and relevant.
Introduce them to sections of Freakonomics. It's a great book, and uses regular language to describe why statistical analysis is important and sexy.
Tell corny jokes constantly. This endears you to them. Be a goof. Do whatever is necessary for them to feel that they are cooler than you. Do whatever is necessary for them to feel that they are smarter than you (even though they trust you secretly have everything under control). There was an article in the NYTimes some years ago about the power of a teacher who is uncool. It allows students to relax. Wear blue converse all stars, do something weird an idiosyncratic so they know they have a chance, and that they have nothing to fear.
Give them things to play with. Get some colored markers (I've done this in university) and have them draw their graphs and notes in color. This makes them feel like they're in elementary school even if they're calculating standard deviation. Major help in overcoming fear.
Get some measurement gear, measure heart rate and have them running around. Demonstrate concepts by collecting data from students live in the classroom. Make them forget it's a statistics class, make them feel like it's a study they are involved in, or administering.
Demystify the math. An intro statistics course has no actual mathematical operation more difficult than an arithmetic class, it's just a sequence of many operations in row, and it's about learning to keep track of that. Tell them it's like a yoga practice in learning to be more organized.
Memorize everyone's name on the first and second day, absolutely. Calling them by their names, poking fun at them sometimes, letting them poke fun at you, are all ways to overcome fear.
They ultimately want to know that you aren't going to hit them over the head with something that they can't handle (that's what fear is). Give them ample warning, and exaggerate how difficult things are as they come up. Start off the class by saying "Boy, you guys are going to kill me, because today is going to be so hard your head might explode," and then when you teaching them variance, let's say, and they find it easy to calculate, then they'll get a greater confidence.
When something is actually difficult to calculate, give them a whole period to do it out, and maybe a second shot the next class depending on your time constraints.
And again, it's ultimately about you. Do you know your statistics back and forth? Does it daunt you at all? Are you a fun teacher who makes students laugh and relax, or are you bumbling and not sure how you're steering the ship? Do you have the class time well managed, or are you constantly not sure how long something will take to teach? When you need to, can you be stern with them (they are medical students after all)?