I'd say it's a publicity tactic. You come up with a name like that, and even though it gets more than its fair amount of scorn, it gets everyone talking about it. So in that sense, it's effective.
I know there has been a lot of debate on this topic over the past year. But many ask why the Wii is called the Wii? Not that I know the answer officially from Nintendo, but it might possibly be laziness. I was surprised when I moved to Japan in '92 that the Japan version of the Super Nintendo was called the Nintendo Super Famicon (or Super Family Computer). It's apparent that this name would have turned off many consumers outside of the Japanese pop culture. Not to mention, the original name basically summarizes the company and their genre. Perhaps when they were just being lazy and coming up with one name for all markets. Perhaps W.i.i. is an abbreviation for something since there is no actual Wi sounds in that Japanese language.