Oh the drama! Here is the final answer as told by
http://members.fortunecity.com/samus_aran3/id106.htm
"Princess Toadstool is the "damsel in distress" of the Super Mario Bros. series.
The Princess has starred in Mario games since Super Mario Bros. on the NES. In almost every Mario game, she is kidnapped by Bowser, and Mario has to set out on a adventure to save her.
The first game where you could actually choose Princess Toadstool as a character to play as was Super Mario Bros. 2, in which you could choose between the characters Mario, Luigi, Toad, or Princess Toadstool. She was also the only character who was given the ability to float, by holding down the jump button. She has not been a playable character in a normal Mario game since then, though. Although she has starred in other Mario games that aren't linked to the series. She's been a pickable character in games like Super Mario Kart, Mario Kart 64, Mario Golf, Mario Party, and Mario Party 2, as well as the sequel to Mario RPG, Paper Mario.
The Princess was always just called Princess Toadstool, and was known as the princess of Mushroom Kingdom. It wasn't until Super Mario 64 though, that she actually got a name.
In that game, she writes a letter to Mario, signing it "Princess Toadstool: Peach". Since then, she is hardly ever called Princess Toadstool, unless your talking about older Mario games, even then though, she usually goes by the name Peach, or Princess Peach.
In most games the Princess always wears a pink dress and a gold crown on top of her head.
Princess Peach, or Princess Toadstool, will probably always be at the center of Bowser's evil schemes, as he seems to never stop kidnapping her, in his quest to defeat Mario. So until then, you can count on Peach always being the one you have to save!"
Also here is a snippet from a message board...
"Like I said, there's only 2 Princesses in the Mario Universe, Princess Peach of the Mushroom Kingdom, and Princess Daisy of Sarasha Land. thats true and false. yes, toadstool and peach are the same with toadstool used in america 1st and peach in japan then used in m64 because mr. miyamoto thought it was about time to bring american and japanese gamers closer together. yes daisy is a different princess altogther(shes in mario land 1, mario tennis, mario party 3, etc) and theres a third princess. pauline from the original donkey kong and the remade dk for game boy pocket"
Yet more info:
http://www.nintendoland.com/home2.htm?mario/friends/peach.htm
so there!