The way this should work: Community provides input on what the term should be and hopefully we get some sort of consensus. Then somebody builds a pull request with the changes in simplewallet (and whatever other software uses the terminology) and it gets merged.
I think the term "Privacy Level" makes the most sense to current users, and I think it will make the most sense to future users. Also, one of the main pillars of Monero is Private, so it fits neatly within the three pillar framework.
Other people have noted their support for the term Privacy Level, mymonero uses it and there seems to be some consensus on this term. Also, I think the term privacy level makes the most sense in the GUI being currently worked on.
Maybe give the discussion a couple more months then somebody (I can do it even) can submit a pull request for the change on github.