Not to mention it doesn't use the pronunciation of the existing word 'gnu', so there's additional friction as you explain to the newcomer why it's pronounced a stupid way.
I heard a talk by a gnome foundation lawyer, and even she had difficulty sticking to guh-nome. If these were nonsense words it'd be less of a problem.
I think that's part of it, and another part is that GNU failed to pick up the Linux kernel early on. I think if they had quickly recognized, "hey this is a great way to complete a releasable version of GNU OS, at least for an initial release" and put out a preliminary package of some sort, labeled as the GNU operating system with Linux kernel, people would've called it that. The fact that the distro packaging went the other way—people from the Linux community, not the GNU project, plugged together parts of the unfinished GNU OS and the Linux kernel—meant that it got more associated with the name Linux.
I think you might be mistaken about the order of events. Originally, the operating system was supposed to just be called "GNU". They developed almost everything except that they bet on the wrong horse with The Hurd. Then Linux came along (Linus used the already available GNU tools to develop Linux) and filled the empty spot.
I sort of can understand that Stallman is pissed that he not only realized the necessity, but actually sat down and spent a lot of time and energy developing a project which today is portrayed as being (mostly) Linus' achievement. I mean, interested techies know the deal with GNU and Linux (the kernel). But in the general public? By now the word "Linux" (meaning the full OS) has already gained some attention outside tech circles, but who has ever heard of "GNU"? At the same time when you listen to Stallman talk about this he likes saying things like "the GNU system was just missing the kernel", as if it was a minor contribution.
I think calling the OS that is based on both GNU and Linux "GNU/Linux" is fair, but at the same time it really just sounds a bit silly.
If RMS picked something a bit catchier, it'd have taken more mindshare.