"AMD vs NVidia" might look better to AMD, but I'm not sure it looks better to consumers... Average joe consumer will wonder if the "AMD" video card will even work in his "Intel" computer. Plus, unless people KNOW that AMD bought ATI, they'll be wondering just what AMD knows about video anyway and why theyshould be trusted with it.
To me AMD has less marketing cache than ATI did. If anything rebranding AMD CPUs to ATI would have been just as "smart" (or not smart).
I'm kind of surprised that that merger was even allowed to happen. What happens if AMD makes "AMD Video" cards somehow proprietary with custom AMD busses. Then intel and nvidia get in bed and do the same? A MASSIVE amount of choice will be removed from the consumer.