I recently came afoul of a rumor (that apparently has been circulating for several years now, but this is the first I've heard of it) that Dead Space started production as System Shock 3, and that somewhere along the line, they decided to retool it and spin it off into what would become a new IP.
The evidence to support this is scant, but we know for a fact that EA has the rights to the System Shock IP, and that they renewed their trademark protection for System Shock on January 9, 2006. A few days after that information was made public, an anonymous but supposedly reliable source leaked information that EA was, in fact, making System Shock 3, and had handed the project to EA Redwood Shores. On September 24, 2007, EA publicly announced Dead Space, saying that EA Redwood Shores "has been working on" it, and that it's a new and exciting IP and blah blah blah. No news on System Shock 3 has come to light since then.
If any of this is true, there could be any number of reasons why they decided to spin it off into a new IP. From a business standpoint, they could have feared that people would associate it with Bioshock and get confused, hurting sales, or the bean counters counted their beans and determined they could make more money in the long run by creating a new IP. From an artistic standpoint, maybe the game was already shaping into what it is now, and the dev team felt like it had become something too different from the franchise to bear the same name (ironic, considering Dead Space 3...). No one knows.
Slim as the evidence is, this does make a certain terrible amount of sense, considering how many similarities Dead Space has to the System Shock series. This makes me a little miffed because I love System Shock 2 to death. I loved Bioshock, and I used to scoff at the elitist fanboys who didn't like it, solely on their platform of "well it's good, but it's no System Shock 2...". Now that I've played it, I finally get it and have joined their ranks. Especially in the wake of Bioshock Infinite, I would love an honest-to-god sequel to System Shock 2.
Sources:
EA files System Shock trademark
PC Gamer UK speculates System Shock 3
EA announces Dead Space