Several world leaders, including the French head-of-state and President Obama are now referring to ISIL as 'Daesh'.
(Yes, the article dates back a bit, and there are more recent ones, but this one gives more of the 'why'.) There are a number of psychological points to this.
1) While still an acronym of the group's name (in Arabic), it forms a word that is less than flattering: Depending on how it is conjugated in Arabic, it can mean anything from 'to trample down and crush' to 'a bigot who imposes his view on others.' (Still accurate, in my opinion, but there you go.)
2) It removes the designation of 'Islamic' from the group, which helps to distance the terrorists from Muslims as a whole. (This is similar to referring to the WBC as the 'Westboros' instead of the 'Westboro Baptist Church'.)
3) It's hard to maintain an aura of superiority and be attractive to new recruits when your name translates to 'losers'.
4) The terrorists don't like it.