This is a very good question, because you're right, at first the ABO convention for blood typing seems a little illogical. However, the story of why we use an O instead of a C actually turns out to be an interesting one, and in the end it makes sense.

The importance of blood was recognized back in ancient times, but the way in which it actually worked and moved about the body remained a mystery. It wasn't until 1616 that the circulation of blood was properly described by the Englishman William Harvey. His discovery was a major advance in medicine and physiology, and represented a radical departure from over a thousand years of thought on the movement of blood in the body (in fact, because his theory challenged so many centuries of medical belief, he hesitated until 1628 to publish his ideas). His discovery also made possible a new form of treatment: blood transfusion.

By the mid-1600s several physicians were experimenting with blood transfusion with mixed success; within ten years, in response to some of the more spectacular failures, France, Italy, and Britain had each enacted regulations prohibiting the transfer of blood from animals to humans. (At that time physicians were unaware of differences in blood between animals and humans, and also did not yet know about germs and the diseases that could be introduced through animal-human transfusions. It's easy to see how some of these experiments could turn out very badly!) By the late 1800s transfusions were considered a highly promising yet risky procedure. While the successes were encouraging, in far too many cases the red blood cells would clump together (agglutinate) in the patient upon transfusion, often resulting in death. The doctors of the time thought this clumping was due to some sort of disease in the patient.

Karl Landsteiner, a pathologist in Vienna, wasn't convinced. He decided to perform some experiments in which he collected blood from many volunteers and then crossed the red blood cells and blood serum between donors in various combinations. He recorded which combinations resulted in agglutination and which did not, and during the course of his experiments he began to notice a pattern. In papers published in 1900 and 1901 he related his findings, asserting that there were three different groups or types of blood found in people. He claimed that the agglutination people had so often observed after transfusion was not due to illness or disease, but rather was the result of crossing incompatible types. You may be surprised to learn the names he assigned to the three blood groups he identified. He called them types A, B, and C-- just as you suggested!

A year later, two of Landsteiner's students, Alfred von Decastello and Adriano Sturli, discovered the fourth (and most rare) blood type, AB. Landsteiner and his colleagues later decided to change the name of blood type C to O in order to indicate that it is unique from the other blood types in that it lacks surface antigens.

I'm not sure why they chose the letter O, but for me it has always seemed intuitive, and it makes it easy to remember how this blood type is different. Type A red blood cells have A antigens on their surfaces, and type B red blood cells have B antigens on their surfaces. Type AB blood have both the A and B antigens on their surfaces. If type O blood still was designated with a C, we might be inclined to think that it possesses C antigens. By naming it with an O instead, we are reminded automatically that it is different, and I have always imagined a round cell with smooth surface-- just like the letter O!-- and zerO antigens. I don't know if that's what Landsteiner and his colleagues were also thinking when they chose the letter O, but I'd like to think so!

Landsteiner's discovery was incredibly important, because it finally made blood transfusion a viable, safe option for treatment. This procedure has since saved countless lives. It was also recognized that blood type was heredity, allowing police and others to test blood to determine if people could be related or to see if a suspect matched the blood found at a crime scene. Because his discovery was so important, Karl Landsteiner received the Nobel Prize in Medicine in 1930.