Here's my first post... unfortunately I don't think I'll make much friends here, since I "like" the name, and I have a somewhat crazy theory about it...
It's almost impossible that Nintendo wasn't aware of the consequences of this decision, maybe the controversy wasn't part of the initial plan, but they decided to stick to it, for the sake of it and for all it stands for.
I see that some people commenting don't hate the name that much themselves, but are afraid that it may be ridiculed at school or at their workplace... Well it shouldn't be that way... Nintendo, yourself and the world in general, shouldn't be at the mercy of schoolyard bullies!
Let's say that there is new some asian kid named "Wii" in your class at school, will you:
A) Make fun his name, calling him "wee wee", and encourage bullies to ruin part of his childhood?
B) Try to look indifferent to the name, taking a "low-profile" approach to be sure not to be ridiculed for defending Wii?
C) Defend Wii against the bullies, and side with people that are tired of mean jokes and verbal abuse (or textual abuse, on the internet)?
There is a lot of intermediary possibilities, but for the post I only use 3 categories.
Nintendo wants us to be part of group B or even better, group C. If people in group A don't want to buy the Nintendo Wii because of it's name, well so be it... We don't want you playing our console, because we don't want you to drive the Wii market toward mindless, ruthless games. You like making fun of other's people name? You hate the French or like to make fun of other languages? (Oui?) We don't want you on our online gaming network.
Group B and C are really the majority, though group A tends to be "louder", and adults usually shift towards group C as they get older, and incidentally stop playing video games since what they see on the PSx and XBox is aimed at group A in particular. You see, group B and C really fit the market Nintendo seems to be aiming at with the Wii. These people won't mind the name, some will actively defend it if they have to.
After all, it's a single syllable, and the sound of it is used much more commonly to say "we", which has a more serious and profound meaning. It also has something to do with the sound "Weee!" that we innocently shout when we have fun (usually when we were kids). Games can be serious (Chess, puzzles) and/or also innocently fun. Four players Pong with the Wii remote? That in itself could produce many "Weeee!" from perfectly sane adults in all parts of the world.
The name Revolution was a cool name and all, but it has a political meaning to many... The name also sets the expectations too high, people expecting things like force feedback and virtual reality. Wii sounds more like "A new simple way to have good old fun". People ridiculing the name will only help to create that market amongst non-players, by exaggerating the contrast between the Xbox/PS market and Nintendo's market. The XBox/PS market will be seen even more about bullying others with virtual guns, cars, making fun of names and cursing through voice links. In contrast Nintendo's market will be seen as being about simple innocent fun.
The look of the console is serious though, and there's a reason to it. Adults (a good part of what Nintendo is aiming now, despite what some say) also have "serious lives", so when they are not playing they want the console to blend with their living room. But when you power it up, the shiny blue light comes out of the dvd slot, putting an emphasis on the fun content of this otherwise serious looking rectangle box. And then you can say "Weeee!" and wave your hand in the air like some crazy kid with a laser pointer

We'll get used to it, just like we'll get used to say the syllable "Wii".
The jokes will get old quickly, anyone still making these jokes in a month will only help the cause, generating a lot of "We don't care" or "We like the name".
"Nintendo wee wee ahaha"... Whatever... who's looking immature now? It's an old joke already...