I used to sell laptops at Best Buy and the average buyer didn't know or care what an i3 or an i7 was. They typically had a specific use in mind and wanted something to meet that need at a price $150 lower than what was possible.
The goofy naming scheme is likely not going to confuse the average consumer base as much as it will the enthusiasts. And most of these processors are going to be sold to average consumers, meaning the naming convention doesn't matter all that much. Still in the end Intel could have done better.