Yes, it was a trademark dispute. I believe the same is true in Germany (http://news.bbc.co.uk/1/hi/technology/10096107.stm)
The English trademark was owned by someone else, and wasn't in active use, afaict.
Update: http://techcrunch.com/2010/05/03/gmail-uk/ says Google reached a settlement after "engaging in legal proceedings at the trademark office" (read: pointing out that it wasn't in use, in order to get it revoked).