From GoNintendo, in an interview between GameInformer and Miyamoto:
Yes, it is a fact that I met John Kirby and got to know him when he was defending us during the lawsuit against Universal. And it is a fact that the Kirby name was partially chosen in connection to him, but it wasn’t named after him. Instead, we had a list of names that we were looking at and Kirby was one of the names on the list. As we were going through the list and narrowing down the selections we saw that Kirby was there and we thought John Kirby’s name is Kirby, and started thinking that if those two had a connection that would be kind of funny.
The other element to the naming is that the character is very cute. Kirby is this soft and fluffy character and he’s very cute. In Japan, for cute characters they use very soft names with soft sounds in them. I thought the name Kirby had these harsh sounds to it, and I thought the
juxtaposition of this cute character with this harsh-sounding name was very funny.
Harsh sounding name? Maybe I must be pronouncing it wrong.