Naming after the purpose of the box also gets messy if you're not strict about renaming when the machine is repurposed. And if you group by "theme groups" as the RFC suggests, you're still stuck renaming a machine if it's no longer one of your 7 dwarfs (database servers, or whatever). Should the name convey meaning at all, or just be a random label?
A developer I know doesn't see the problem with just having the full location (state, data center, rack, rack location), which I'm against, but we haven't been able to agree on a good middle ground approach that scales. Is location data in a name universally bad?