Here's an argument I whipped up fairly recently:
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Alright, you jokers, strap yourselves in:

When whoever-the-smurf was picking a name, he took the written English word Earth and split it up into four pieces: E-A-R-TH. He then assigned a katakana syllable to each segment separately by rough phonetic similarity: エ-ア-リ-ス, or E-a-ri-su. (The reason for the 'I' being introduced into the name was an arbitrary choice between the symbols for ra, re, ri, ro, and ru; a simple "-R" sound was not an option. And of course, ス is what one uses when transliterating TH.) This exercise produced a multi-syllable name which sounded quite different from its inspiration, and intentionally so. Keep in mind, the creator could have easily used the typical phonetic transcription approach (e.g. Cloud => Kuraudo) to arrive at アース (Aasu) as the best approximation for Earth.

So the real significance of the "Earth" origin is that a transliteration trick was performed on the dissected written word in order to select syllables; it was never the goal to precisely replicate the sound of the English word. The best translation, then, will not undo this unique syllable-play; rather, it will capture the pronunciation of the name - which at its core is a Japanese construction - into an accurate Romanized representation. The part no one disputes, エアリ (e-ah-ri), becomes "Aeri". Why? Because that's the English spelling which best replicates how エアリ sounds to Western ears - distinctly NOT a relapse into the original pronunciation of EAR in Earth. Same goes for the final sound ス (su), which is represented best to Western ears by an S.

Aeris.

Someone (I don't care who) later lost their trout over the fact that both S and TH can be valid mappings for ス. They assumed that the English pronunciation of "Earth" was intended to be faithfully preserved, at least in part, and thus concluded that Aeris was a mistake. After all, "Japanese has no TH sound, so 'su' is obviously the creator's best attempt at a phonetic transcription." ...Right?

But Japanese also has no lone "-R" sound, so by the same logic, リ (ri) is just the creator's best attempt at reproducing the R in Earth, with '-i' appearing as an unfortunate side-effect. Even エア (e-ah) could be playing a role in mimicking the emphasized "-R" sound while introducing more undesirable artifacts.

The point is this: The line of reasoning which leads to choosing 'TH' also leads, in the name of phonetic faithfulness, to destroying the syllable-play essential to the original name's construction, until eventually we are forced to translate the name as "Earth" (or optimistically, "Aerth"). Indeed, not only does Aerith have less basis than Aeris, but it even has less basis than the word Earth itself if we are to adopt a consistent approach.

Aeris. Seal it and ship it. Even with the late-night typos and grammar slips, FF7 was translated very well considering the volume of text therein. Do you really think they'd blow the main heroine's name so easily? They also translated ス to TH when it was appropriate to do so (e.g. Sephiroth, from an actual phonetic transcription), and they obviously had the capacity to make a decision between the two. Unlike the English-to-Japanese transcribed names (e.g. Kuraudo) which suffered from language incompatibilities, エアリス was entirely borne from them. The translation "Aeris" reflects this properly.

It seems these days Square Enix listens to what fans have to say. We have just a couple of years to convince their Western localization team to unsmurf Aeris's name for good.

TL;DR
>エアリス (Earisu) is a *thoroughly* bastardized transliteration of Earth
>Translating it back with -TH chips away at this key characteristic of the name, so
>"Aeris" is actually the most authentic translation.
>Now that we are educated on the matter, it's time to mosey.