Our company was launched in 2003, well before Google Sites. Since we also own the trademark for Bandzoogle, it isn't a stretch to change to Sitezoogle. My lawyer (who can't officially represent me) said that the trademark office looks mainly at the first 4 letters of the name. Google Sites is a trademark, which is very different from Sitezoogle.
The very worst that can happen is that I lose a few thousand dollars defending their contest. It's not like they are going to back down at this point. The next thing they'll send is the domain dispute letter. If I lose, fine, I'll change the name. But just instantly giving in to the big "do no evil" bully seems a little premature.