Animeniax 
According to Wiki (http://en.wikipedia.org/wiki/Number_sign):Originally Posted by Animeniax
"In Commonwealth English, the symbol is usually called the hash and the corresponding telephone key is called the hash key. In American English and Quebec English, the symbol is usually called the pound sign (outside the US, this term often refers instead to the British currency symbol "£") and the telephone key is called the pound key.[1] In Canadian English, this key is most frequently called the number sign key."
In my experience, I have heard both 'hash' and 'pound' very frequently to refer to that symbol far before the invention of twitter. So the word 'hashtag' comes from that, and is not something completely made up.
Edit: I forgot to mention that the word 'hashtag' was originally used in HTML. So twitter just borrowed a word from existing web jargon.
