The designation bestowed by Columbus, ie pepper, is still used to describe the gently flavoured, temperate members of the family, which we know today as “sweet” or “bell” peppers, but it is the Mexican name which has stuck to those which bear true heat, be it mild or blistering: “chilli”, from the Aztec Náhuatl language. “Chili” and particularly “chile” are often used – and the Mexicans themselves call it “chile”
All About Chiles – A Primer On An Essential Component of Authentic Mexican Recipes
Isabel of BellaOnline has outdone herself again and written a fantastic article here on the history of the chile and how it came to where we are today, with it spread (at least partially) across the planet:
Interesting of note to me is how chile is spelled in different places: the Yanks seem to prefer calling them "peppers", whereas the Aztecs called and spelled it "chilli", but today both chili and, particularly in Mexico, "chile" has become the norm.
However you spell it, if you like chiles, I think you'll really enjoy this read. Again, you can find it here: http://www.bellaonline.com/articles/art48043.asp
Check it out!