ARGH!
I don't blame you, kamamer, for propogating this myth, but the "butterfly flaps its wings in China" explanation is a load of crap invented by Michael Crichton in order to sell more books. (Jurassic Park)
The real story: The name "butterfly effect" comes from the image of two graphs. A scientist, working on a weather modeling program, decided to go out for lunch in the middle of a simulation. Before he turned the computer off, he wrote down all the values in the system. (They didn't have nifty things like hard drives in those days). But he when he came back, he only entered each value to two significant digits, while the computer worked in four or five. The results of the simulation were much different from what he had expected. He traced the error back to entering imprecise numbers. He went back and ran the sim again with five significant digits. Then he compared the two graphs. At first, they appeared to be almost identical, then one began to diverge. Eventually, they were so far out of synch that the graph looked like butterfly's wings. That's where the name comes from.
This is also known as sensitive dependence on initial conditions.