That's just the name that the original founding coder (vinced from the bitcointalk forums) chose and nobody has wanted or bothered to change it: https://bitcointalk.org/index.php?topic=6017.msg88356#msg883...

Some chose to refer to it as the dot-bit project as well.

I have never seen any arguments over the name.

namecoin == nmc == dot-bit

Namecoin encompasses more than just .bit names.