While AMD definitely had some serious success stories (like with the original Athlon series), I think a lot of consumers associate them with being cheaper/inferior to Intel. I can't tell you how many times I've seen and heard that with people shopping for computers.
ATI doesn't have that same connotation. Plus, AMD's colors are green. I like the whole red/green thing going on with ATI and Nvidia.
I can totally understand why AMD would want to do this, but........
I know a lot of people that refuse to buy an AMD cpu for the exact reason that you mentioned: they view them as inferior to Intel cpu's. When I think about it, the majority of them own ATI cards and to be honest I know that they don't realize ATI is AMD. As soon as they start selling gpu's as AMD video cards these people will be switching to Nvidia, I know these people.
So, I can see pro's and con's to AMD doing away with the ATI name.