I don't think it's as bad as anyone think it sounds. I think they're jsut shocked that it's something so "different".
Let's face it people, all console names up to this point have been unoriginal and boring. Xbox. Wow, take it TO THE XTREME. Now throw on a 360. Exciting. Playstation 1,2,3. 'Nuff said. Nintendo, Super Nintendo, Nintendo 64, bleh. Gamecube made an ATTEMPT, and it did slightly better, but still not quite there.
Now I'm going to backup why I think Wii will still sell extremely well, despite the weird name, which is, people DONT CARE what it's named. People will fall into one of two groups here, people that understand WHY it's named "Wii" (as in we, community, blah blah) and people who don't understand why it's named "Wii". Now, look at the Nintendo DS. Same idea. People that knows what it means (Dual Screen AND Developers System, some people still don't know this), and people that have no clue what it means. Guess what? The system has been selling millions to both groups of people, regardless of how much they know about the system. Wii falls into the same category.