From Answers.com:
Fornication came about to be a blanket word for sexual immorality for the same reason that, today, the word "gay" primarily means homosexual. It was just extensions of the original term that slowly became widely accepted. Eventually altering the meaning of the word.
There may be a couple reasons why fornication is not mentioned in the ten commandments. First of all, at the time, sexual contact between two unmarried individuals was not as unacceptable as some would have you believe. Though certainly not lauded, there are documented cases of (at the very least) temple sanctioned prostitutes in the Judeo-Christian religion (more Judeo than Christian, but it would not be surprising to find cases in the latter.) Secondly, there may not have been a word for fornication at the time the ten commandments were created. This is, however, just a guess as I have no way to confirm this.
Biblically, at least within the old testament, sex between two persons who were not married was not considered a sin, per se. It just wasn't recommended. New testament-wise, you need to remember, that nearly the entirety of this testament was a series of opinions from practitioners of the early religion. One or two of them thought that it was sinful, so it became sinful.