Thanks for the link, honeychile! We've discussed it a few times and my mom always said, "I don't know, maybe because it's full of fruits and nuts?" So it looks like somebody named it that for a catchy headline and the rest is history.
Like all jello/pudding/coolwhip side dishes, at least for midwesterners, Watergate Salad is the bridge between lunch and dessert. You stuff your face until you're ready to burst, then go through the line again for a big clump of Watergate Salad, 7-up Salad or some kind of jello with strawberries and whipped cream. Then you plop yourself in a chair for an hour or so before you go for a piece of pie or cake and a cup of coffee.
(After you play cards and the kids run wild looking for eggs and eating chocolate, your grandma will insist you all have a sandwich for the road because you must be famished by now!)