Why the change? When Google suggested “Nexus Two,” since it is the second Nexus phone, Samsung’s response was, according to a source, “We don’t like being number two.”
The original Nexus One was manufactured by HTC.
So they went with “S”, which fits with Samsung’s naming style for the Galaxy S, which the phone is based on. It stands for speed, or smart life, or smart phone, or something (we’ve gotten conflicting information on that).
Nexus S is cool by Samsung. Nexus Two? That’s just being second.