Yeah, but it's not like the exact same confusion hasn't occured for PS2/PS3, Xbox/Xbox 360. Anyway, there is no chance in hell that Nintendo will ever change the name so I suggest everyone try to get used to it fast.
Here in the United States its more traditional to put new Single Letters on revisions. Perfect Example, DS -> DSi -> DSiXL(Though to be honest the XL makes it sound like it could be a different system) | 3DS->3DS<Alpha> for the next revision. Something else to take into consideration is that even the gaming press is having a hard time getting a clear form of the name out and they've had to deal with some weird names.
Since their is a young gaming presence I can see anyone under 12 having a hard time differentiating the name from Wii while speaking especially to someone who isn't into games, think Grandparents, Parents, etc.. Though as for Brand confusion on the software.
Outside of the box the Wii and Wii
u discs will probably look the same. I'm hoping Nintendo does not go with the White boxes used for 3DS and Wii Games. Having distinctly different looking generic boxes from Wii will help distinguish in the store between the different games. Sort of like a Blu-Ray disc box is a little shorter and rounded at the top to make it look different then a DVD Case. I honestly wouldn't mind them going to a case that was just big enough to hold the 12cm disc, though that would look like a CD Case, one of the reasons DVD Cases are taller. Another thing that will cause a bit of brand confusion is using Wii Accessories.
Its pretty easy logical leap to go from using a Wiimote as a primary controller (Which the Demos seem to be hinting you could do) and thinking this is a revision to enable the uMote. Something it is clearly not. Nintendo needs to make it very clear that this is a new device with everything you love about the Wii but, its not a Wii. Its better and it is its own consoles and should be judged accordingly. (aka The Console itself should not look like the Wii or a mini XBox 360)