We’re very likely following the StarCraft II character name system in Diablo III, but it’s something we’re still discussing.If so, then this won't be a viable gold making strategy anymore, and you'll see thousands of characters ingame named Legolas.
We think the ability to name your character anything you want (barring restricted words, of course) even if someone else picked it is just a more positive experience for the user. You want your barbarian named Baba? Cool, have fun playing the game. The World of Warcraft experience of sitting there trying names for 30+ minutes until you find one that isn’t taken can be very frustrating, and ultimately you end up with a name you didn’t really want. Granted that’s for a well-aged game with a lot of characters created over the years, but it’s also a game that’s broken down into hundreds of separate servers. In Diablo III everyone in a region is in the same boat, so unique-naming difficulties could get pretty out of hand even in the first few months.
As I said it’s something we’re discussing and could have some different angles on those ideas, but that’s essentially where we see the benefits of a non-unique naming system. [Source]
I can understand their reasoning.. there are pros and cons to doing it either way. They could make a lot of money from the old fashioned WoW style naming approach and players would be very happy to have unique names. On the other hand, it alienates newer players as the names dry up. With the StarCraft 2 naming method, it appeals to more newer players but takes away the pride of having a one-of-a-kind name.
It's something they're still discussing though, so they're still weighing the pros and cons themselves.