When I saw the Wii U reveal video, I was sorely tempted to think that we'd all be suckered at it was literally an update for the Wii. Now, I rationalized "that can't be true" and was looking extremely carefully in the Wii-like demo footage for signs that the visuals couldn't be generated from a Wii.
But yes, the demo film was terrible in that regard. It truly did give the impression that Wii U was purely about an upgrade to the Wii, and only for those "expanded audience" applications, games, and functions. To someone in the real world (not the geek dimension) there's no way they could have walked away thinking it was a new console, much less one more powerful than the well-known PS3 and Xbox 360.
Also, I'll cast my vote with "Wii U is a terrible name". It sounds like a first marketing pass; an initial name used in private focus testing to see how people react. Not what you'd unveil to the public.
Even the name 3DS, for all the flack it gets, isn't as poorly chosen. It's a natural name for instance that describes the system simply and accurately, with a pun on dual screens as well as 3D. And the 3DS is honestly more of a direct step from the DS line.
But Nintendo claimed they wanted Wii U to handle "both roles at once". The name and branding does not do that in any way. It's also awkward and difficult to even say Wii U and it can't be contracted or abbreviated elegantly. It's like marketing failure 101, something that's extremely weird for Nintendo.