I admit that was a good guess but actually no, there was no reason it was called Greenland. The name was simply invented by Eiríkur Þorvaldsson who hoped to attract more settlers to his newly established colony of exiles, ie it was a PR stunt that had very little, if anything to do with the actual landscape of the place (sorry, my best source is in Icelandic (http://ia331434.us.archive.org/3/items/slendingasgu0104valduoft/slendingasgu0104valduoft.pdf)). In fact after several decades, Eiríkurs colony faded away due to severe deterioration of the climate (the mini ice age of the Middle Ages caused by shifts in the Gulfstream), and the Icelanders were forced to abandon that outpost (but not before having discovered Newfoundland) and their area of operation was thus only limited to the Norwegian sea and as far as Föroyar. Later the Danes who re-settled GN initially called it Grundtland because most of the large bays were too shallow for their longboats, ie again this had nothing to do with the vegetation (or rather, lack thereof).

Granted, while South Greenland is indeed somewhat greenish with moss in its rather shorty summer, there's nothing remotely resembling greenery anywhere in Greenland. And i'm saying it as someone who's been (http://hfjgangpix.fotopic.net/c323369.html) several times to Tasiilaq on the east coast, once in Qaqortoq in the extreme south and once in Nuuk on the S-W coast, all in summer, within a span of 18 years (last time was in 2006).