Glad you brought this up, I find it very odd that people mispronounce it. It stands for FROzen YOgurt! Nobody goes around saying "froizen" do they?
Google didn't create the word fro-yo. Them pronouncing it like Jobs does just makes them both wrong. If Apple had decided to refer to OSX 10.4 as "tigger" we wouldn't all be saying that was suddenly an acceptable pronunciation of the word tiger.
Jobs is wrong. Fro-Yo.. the first two syllables from the words the term is derived from
frozen yogurt > fro-yo
Pronouncing it otherwise just makes you look like you're illiterate... or a douche
If I didn't know (or give a shit) what it stood for, my first guess would be "froi-yo".
Since I know it stands for Frozen Yogurt, I assume the "correct" pronunciation is "fro-yo".
But I think it's pretty safe to assume Steve Jobs doesn't give a shit what it stands for.
So, I keep saying it as "froi-yo" myself. I think because when I quickly read it, I want to pronounce it the same way one would say the word "Troy."
Bottom line, English sucks.