I fixed this on my son's iPad if anyone is interested. Seems there is a bug in the new colors feature (or this release) that gets the name into an irrecoverable state.

Basic steps:

1. Download any ios file manager that can edit/download/upload files to the ios file system. I used iFunBox (http://www.i-funbox.com/en_download.html) that works on Mac and Windows (I'm on Mac).
2. Go to the Mincraft PE app and find a file called "options.txt".
3. Open the file for editing (for iFunBox, this means copying the file to your computer from the Minecraft PE folder)
4. There are variables in there and you need to edit the one called "mp_username"
My son's was hosed when he tried to change his name to enable the new color option or something. Anyway, that variable was full of garbage and looked like "mp_username:dsfsdfsdlk3e2 23)2342ref s(sf23r0 sdfSDF)SDF".
5. Change that to mp_username:YOURNAME or whatever you want. Doesn't matter because you are essentially making the field usable again by the game.
6. Save the changes. (for iFunBox, this means copying the file back from your computer to the Minecraft PE folder)
7. Reload the game and it should work.

Hope that helps anyone else with the problem. I can whip up a quick youtube howto if needed.