Salm and Salam are the root words for the “Islam” which mean peace and tranquility. The importance of peace and tranquility has been pointed to in the Quran numerous times.
The Quran says: “But if the enemy shows a tendency to peace, do thou (also) show a tendency to peace…”
What is wrong with calling Islam religion of peace?
Nothing at all. If a follower of Islam is a peaceful person, then to him it is a religion of peace. If a person does evil in the name of Islam that is another story. People have done evil under the name of many religions. That doesn't make the faith as intended inherently evil. What man does with a particular religion is the key. IMHO