Lisp is the original functional language. Functional language traditionally meant a language that emphasised functions as values, in particular supporting higher-order functions. Hence the word "functional".

More recently, people have confused "functional" with other features of languages like Haskell (sometimes called "purely functional"), leading to some confusion about what defines functional programming.

Here's an interesting post about the more recent changes in the phrase's meaning:

http://wcook.blogspot.co.uk/2012/07/day-functional-programmi...