An autopilot in newer light GA aircraft, like Bendix/King KAP-140, is able to hold/climb/descend to an altitude, and maintain heading based on the GPS input, so it does handle hands-on flight operations leaving the pilot to maintain awareness and program the GPS.
What do you mean by this? There are many autopilots which won't take over all flight operations. Some only handle a single control axis, or two. More sophisticated ones can indeed handle everything, but that's not the only kind out there.
If people think that's what all autopilots do, then the name is still a problem, but that's a bit different.