The word books refers to every single type of book -- including things like technical manuals and scientific publications. Books also implies a physical book, which would rule out questions about stories published online, etc.
I think the word literature is a more accurate word to describe this sites scope. Although there is disagreement about how to define literature, I would define literature as stories written down1. That definition to me seems like the simplest explanation of what our site is about.
To respond to the points you raise:
Books sounds more user-friendly, whereas Literature might make people think the site is only about classical works like Shakespeare and Tolstoy, and deter them from contributing even if they're great consumers of more recent works of literature.
Let's take a look at the proposed questions for the Literature site. I'm seeing questions about The Da Vinci Code, I'm seeing questions about Shakespeare, and I'm seeing questions about the Epic of Gilgamesh, and I'm seeing questions about To Kill a Mockingbird. It looks to me like there's a pretty good mix in terms of the types of books being discussed -- we have popular and classic books, old and new, etc. So I don't think that the name "Literature" is discouraging people interested in asking about popular books from doing so in the Area51 site, and I don't think it will when the site goes into beta.
What I do like about the questions is that they are all sophisticated questions about literature. They aren't just basic plot point questions like "who killed Snape in Harry Potter" -- they're questions that get at really complex elements of the stories we're discussing. I don't know if the name literature is to blame for this, but if having a "sophisticated" name like literature helps keep the quality of question high -- which was a problem with the failed literature site -- then I'm all for it.
Literature would give us a connection with the previous failed Literature proposal (whether this is a good thing, a bad thing, or totally irrelevant, I'm not sure).
I really don't think this is relevant. The literature site was about five years ago; are that many people going to remember it and then think it's a waste of time to participate in the new one?
Books would be more consistent with Movies, another (the other?) media-based site.
I don't think that's something we should be concerned with. It's not our job to make sure the branding of Stack Exchange sites is consistent. We should focus on putting our site in the best possible position to succeed, and only that.
1 With perhaps a liberal definition of written down, to accommodate things like comic books.