I don't necesarily mind the teacup term being used if when I see a breeder using it, they are breeding dogs that are of a good size to be bred (not 2-3 lb mothers) and they are not skyrocketing the prices on the smaller yorkies over the larger ones.
When I got my yorkie McKenzie, she was advertised in the paper as a teacup. I immediately was upset at this and being from the paper, I thought there was no way that it could be good, but we went to check it out anyhow.
When I got there, I saw her mother (her father was co owned and not there at the moment, but I did see pictures). Her mother was 5-6 lbs I believe, I can't remember the exact weight right now... and she was healthy, lively and sweet. McKenzie weighed 1.5 lbs when I got her at 11 weeks and I was told she'd be no bigger than 4 lbs. Right now at just over 9 months she's 4.3 lbs and that's mostly because I feed her too many treats
. I suspect she'll end up around 5 and I'm ecstatic with that!
When I saw how TINY 1 lb is, I was shocked and was praying every day she'd hit at least 4-5 lbs.
I did ask the breeder why she used the term teacup and she told me that's just how she's always done it before there was a big fuss over the word. She was nice, informative, asked me questions and her puppies were all priced the same.
I really think it depends on the context in which people are using the term teacup I guess is my point..