When moons (satellites) are discovered, the discoverers get to propose a name to the IAU, which approves them if they're suitable (and in keeping with general themes that the IAU Committee likes). The names typically come from mythology (or in Uranus' case, characters from Shakespeare). Telesto in Greek mythology was a daughter of Tethys.
What constitutes a moon? Many of the planetary satellites are irregular in shape, and perhaps asteroidal (ie. captured) in origin. There have been dozens of new moons found in recent years that are little more than a few km in size.
David - the November AS&T is back from the printers and is in the process of being mailed out.