‘And Jacob called the name of the place Peni-el (‘the face of God'), for he said, “I have seen God face to face and my life is preserved.”
This was a play on words. The site was called Penuel (Genesis 32:31) and was probably an important pass for fortresses were built there (Judges 8:8 on) and eventually a city. Jacob takes the name and changes it to fit his experience. The two forms differ only in the archaic nominal ending in Genesis 32:30. Seeing the face of God did not just mean seeing God. It meant that God's heart was right towards him. Thus did he know that he was not about to die at Esau's hand.
“My life is preserved.” Esau will now not be able to harm the favoured of God. Indeed he will later be able to say to Esau, “I have seen your face as the face of God and you were pleased with me” (Genesis 33:10). He believes that his acceptance by Esau is because of his acceptance by God.
Alternately the words may reflect amazement that he has seen God and lived (compare Exodus 33:20; Judges 6:22 on; 13:22). But the way God reveals Himself in Genesis never seems to cause this problem.