I have the same pet peeve with the genre punk. Most bands now are labeled punk when they aren't punk at all. But there's really nothing we can do about mislabels. D:
STP definately broke out of the grunge sound. Purple The new PJ album (Pearl Jam), the newest Soundgarden album (Down on the Upside), all the new albums of the bands labeled "grunge" aren't really grungish at all. Not to mention that the grunge "sound" is really inconsistent.
But because all these amazing bands are labeled grunge, grunge will always be my one true love (of rock genres), so to me, it doesn't really matter. If I threw every band in generic "rock" than it would take forever to find on my iPod.