Java 2 is actually Java 1.2 and up.

There are a lot of differences, they show up as
depreciated warnings from the compiler. New paradigms
like the Swing (JFC) packages from Netscape have
occured, even changed its standard directory to a
better place, and will work besides the native-look
AWT from the 1.0.

All I know  that they were calling it java  1.0 previously but
starting with version 1.3 they started calling it Java 2

I myself would like to know why is it so?

the reason for renaming Java 1.2 as Java2 is that it is almost a
different language. O.k., AWT still exists, and the basics of
language semantics are the same, but Swing and Proxies and a whole
lot of new standard JARs are a good reason to name it Java2.

At least in my opinion...

I was wondering why didn't they start calling java  1.2 as
java 2.0 skipping 1.2 through 1.9 altogether.

These two numbering systems confuse every newbie for
sometime and then he gets used to it without understanding
the logic.

just like netscape 4.79 giving next version as netscape 6.0

It is worse than that, Java 1.2 is Java 2.0 and they
still continue naming the versions  1.2, 1.3 and 1.4
and I believe 1.5 beta is the current version, so they
did not skip them, I just wanted to say that. The most
logical explanation is probably Nico Heinze's
description.

I have never really heard java  1.2+ referred to as Java 2 except when
purchasing Java books. If that programmer is a new programmer and
doesn't understand why 1.2+ is referred to as Java 2 he asks someone who
knows who should just reply "Java 2 is Java 1.2 or higher", and when the
new programmer asks "why is 1.2 and higher java 2?", the more advanced
programmer should say "marketing".

my understanding of Java 1.2 being called Java 2 was that marketing just
made an executive decision and went a head with it.

java 1.5 beta2 has been released. going by this, maybe in
five years, you will get java  2.0

And then there will be real confusion.

maybe marketing decides to call that java 3, but I wonder
whether that will reduce the confusion, or worsen it.

My thumb rule:
if it is not an integer (1.1, 1.2, ... 1.5), it means the
software release.

if it is an integer like (2), it means java 2 which is a
conceptual enhuancement.

The only people who are going to be mildly confused will be brand new
programmers who can't ask someone a little more experianced themselves.