Some ideas:
- In the U.S. in the late 1980s (as I recall), there was a cartoon/toy franchise called Monster In My Pocket, and Nintendo wanted to avoid any possible confusion or lawsuits based on that.
- "Pokemon" makes it sound more Japanese, and thus was done as a marketing move to cash in on the "anime craze". This seems somewhat unlikely though, since the names of various characters and Pokemon were apparently changed to make them sound less Japanese.