The group took their name from Alan Sherman's classic 1963 hit A Letter From Camp.
Allan Collins frequently performed the song solo when the band wasn't rehearsing and used the name as an alias when ordering pizza and such. The band quickly adopted that alias when they ran into problems going on stage with their original name, One Percent.
It was original drummer Bob Burns (the last school boy in the group) who later came home annoucing that his new gym teacher had the same name no doubt leading to a big inside joke that gave birth to the popular myth.
So the gym teacher name story is an urban legend? Hmmm ... I don't have time to research this right now, but I will. Snopes has nothing on it.