Naming the product something that closely resembles its functionality seems like a great idea for a product. It's still Amazon Lambda, and I think it's very unlikely that people will simply refer to it as "Lambda." If CS students find themselves hopelessly confused by this product name, they are going to have a real hard time tying their own shoes.

If you search for Y Combinator, luckily, https://en.wikipedia.org/wiki/Y_combinator still shows up on the first page of results, I expect the same will be true for Lambda, so I can confidently say we won't lose a generation of CS students to this faux pas.