Coming from a longtime preschool teacher-- yep. Completely common. Not always usual or typical, but not strange or weird to me.
This may have been a couple things; some kids find these sorts of situations a huge 'sensory overwhelm'....it's so new and uncomfortable, checking out is a way of coping, of taking space. Just Too Much. I have seen this with older kids at large events--- they might check out with a book or handheld game-- but they are still checking out. One mom I know said that when she took her 10 year old daughter to a peace rally, her daughter had her head in a book the whole time. Something to consider.
The other idea is that your son may really hate having all those eyes on him. I know children who would fall apart the minute "Happy Birthday" was sung to them, because everyone was looking at them. (One four year old I know negotiated with his mother--she could have a birthday party for him ONLY if no one sang Happy Birthday to him. When this child had a hard time emotionally, I always found a quiet spot out sight of the group so that he could not have the added stress of being watched while he worked through his feelings.
How about asking him before the performance if he actually wants to do it? At 3.5, I don't feel that performance should be mandatory. I think, at that age, there's nothing to gain by being put up on a stage if you hate it. All it will do is create a stronger aversion to this sort of thing. Some kids thrive on the recitals, junior drama activities, etc.- others just loathe it.
Lastly, and I want to stress this, as the mother of a kid who is also an "observer"-- do not compare your kid to those around them. My son didn't do ANY of the singing and motions during his first year of preschool. NONE. It clicked in during his second year. He is a bit on the dreamy side, more tuned in to himself than to what's going on around him. It's been my own challenge to accept him for who he is, here and now, and help him along when it's appropriate. Even at five, now, he's really not cued in to the social life activities at school other kids are excited about.(Sock Hop, craft fairs, etc) I've learned that there are times when I must lead him, and that there's also plenty of time to just watch and observe him, and let him lead me so that I can parent his own unique self better. It's hard when I have had people telling me his behaviors are atypical, because I see something different-- I see a kid who knows what he wants to be doing, a kid who does have friends and is very insightful about some things other kids could care less about.
All that to say, love your little guy as is. There's always going to be one kid or other who marches to the beat of a different drummer-- or the tune of their own kazoo!