Because Pakistan was not a republic until 1956. Until then we were under the british crown. The name Islamic republic of Pakistan was chosen in the constitution of 1956 when Pakistan became a republic.
The Bottom line is, that Pakistanis will decide what our country would become. Majority of Pakistanis desire a functional Muslim state. We may become communists, secularists or a Sharia state, its no one's business. This is our country and we will decide its future.
Lastly, since Muslims are the majority, our laws and way of life will prevail. Millions of our ancestors paid with their blood, wealth and honor so we could have a choice they didn't have. If 3% minorities have a problem with our country's name, it means that they have a problem with Muslims, our way of life aspirations and Islam.
If they have a problem with the majority and their aspirations, the majority can tell them go and smoke bong! - just because we 'can'. The Christians and Hindus didn't have any significant role in our freedom movement, they paid no price for our freedom. They got it as a result of the blood sacrifice of our forefathers....and whoever has the power to give also reserves the right to 'take it back'.