Presumably they don't want to use "Core 3", as that implies an incrimental model, rather than the 'super amazing new design' image they would rather promote for Nehalem.
To me, "i7" seems like a very strange choice indeed, since it has none of the normal desires from a product branding. It doesn't roll of the tongue, it isn't highly identifiable as meaning an Intel product, it isn't clearly a name not a number (Intel apparently originally chose 'pentium' because they couldn't trademark a number), and "i7" is not evocative of anything at all.
Whilst we might see this branding used for less consumer-focused parts, I strongly suspect that they will not actually be going with this. If they do, I can only reason it would be to let AMD have the stronger processor name for reasons of placating competition commisions
Personally, I'm happy just using Nehalem for now until whatever they do pick sticks