And the way I understand Ikkyo, it would mean first level/class/rank. So, shouldn't people be using Ikkajo instead of Ikkyo???
"Kyo" is the character for "teaching" (as in "kyoshi" which basically means "one who teaches"). You may be thinking of "kyu" which can mean something akin to "level" as in "ikkyu."
The -kajo suffix was used in "older" martial arts like Daito ryu aikijujutsu from which aikido stems. Perhaps this is why people like Shioda sensei used the term rather than the ikkyo/nikyo and so forth?
As far as what people "should" be using and such, I don't really care if they call it "ikkyo," "ude osae," "ikkajo," or "pin number one." They're basically still the same thing...