The original wooden version of the Butterfly was first produced and sold in 1958 by Duncan Toys, and was one of its most popular yo-yos before the bankruptcy in the 1960s. It was the very first Butterfly-shaped yo-yo, as well, its design having been invented by then-demonstrator Wayne Lundberg. With its shape, the Butterfly made it easier for players to land string tricks effectively. This yo-yo had essentially planted the seed for future generations of dedicated string trick yo-yos, especially those that would come to be produced by Duncan.
As this was the first yo-yo using this shape, and since the name describes the shape very well, the term Butterfly has established itself to describe the yo-yo shape. However, Duncan was not happy with this, as they have trademarked the name in the U.S. They have tried to discourage the use of the term on web sites. You can read the details here.