Well, yeah, Linux is the kernel. Just like X11 is the display system, or vi (or emacs) is the editor. GNU is not a piece of software, it is an organization; stamping GNU onto the name "Linux" is more of a subtle piece of political spin, and I just don't like it.

Linus Torvalds put together his little operating system on his own time with his own effort, and then just released it into the wild and let people play with it. At the time, the BSD guys were trying to maintain their fork of Unix by keeping total control over the code within a small group of developers, and the GNU group were trying to dump Unix and come up with an entirely new kernel of their own. Andy Tannenbaum had produced Minix and pretty much allowed anyone to use it, but only under a very restrictive education-only license. So there were many different kernels floating around out there.

And that's the funny thing; you're entirely right, since then Linux has had better development, and better hardware support. Most designers of both free and commercial software seemed to assume that it was necessary to keep an iron grip over the code; but it was Linus' much more free version of freedom that won the day. Ultimately, the open source movement truly coalesced around Torvalds and the Linux kernel, not Stallman and the various GNU-related utilities.

Anyway, these are ancient political battles. It probably doesn't matter what people use to name these products today, but I'm old enough to feel annoyed that the GNU guys are still trying to claim ownership over Linux...