You're right--it would have been confusing. In the novel, Puzo had plenty of time to deveop the history of the Bocchicchio family and how they came into the "professional hostage" business. In fact, the idea of a voluntary hostage and how the retaliation would play out made that the best backstory in the novel. But since they didn't figure into the movie except for one mention in one scene, calling the guy a hostage instead of a negotiator would have confused everyone.