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Abram to Abraham
God had promised Abram that he would have a son and that it would be through his wife Sarai. Abram's name means "Exalted Father", which may have proven to be an embarrassment as he aged without children. This fits with God's promise, but he didn't receive that name from God but from his father.
God gives him the name "Abraham", which means "father of many". This reinforces God's promise to Abraham that he would not only have a son through Sarai, but also that he would be the father of many nations. This is true through Ishmael, Isaac, and the sons of Keturah--the wife he took after Sarah died.
Sarai to Sarah
As for Sarai changing to Sarah, the difference is more subtle, being from "princess" to "princess of many". This does not apparently refer to many nations per se, but to many people. This is significant, because Sarah was the mother of one nation, while Abraham was the father of many nations. Still, the name comes from God and is a sign of the promise God had made to her.
Abram's Call to Be Blameless
It is interesting that Abram receives a call to walk righteously. Previously, Adam was created in the image of God and Noah was found to be a righteous man, blameless among the people of his day. Abraham, however, did not initially measure up to that standard. He lied about his wife on more than one occasion.
However, God had already blessed Abram in many ways by now, so he had the assurance that God was with him. He had yet to perhaps surrender fully to God, though. It was not that he was full of blame, but was not blameless either. Thus, Abraham, whom God had chosen to be the recipient of a new covenant through which God would reveal Himself to the world, was called to holy living prior to God's fulfillment of the promise.
New Name for Believers
The implication is that we all receive "names" from the world--the rich kid, the smart kid, the fat kid, the slow kid, the jock. However, God has a promise for our lives as well, and His name for us is different. It expresses our personal relationship with God and the high value He places on us.
For I know the plans that I have for you,β declares the Lord, βplans for welfare and not for calamity to give you a future and a hope. Jeremiah 29:11 NAS
Whoever has ears, let them hear what the Spirit says to the churches. To the one who is victorious, I will give some of the hidden manna. I will also give that person a white stone with a new name written on it, known only to the one who receives it. Revelation 2:17 NIV
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According to Sefer ha Yashar, an ancient midrash that has the backstory on many of the Torah narratives, Terah father of Abram had been appointed by Nimrod as a "prince". Abram was born late in Terah's life, and as a statement to his own honor, Terah named him because of his own pride, "exalted father." You really have to question a guy who would name his son "My dad is an important guy." Abram had already been called to Canaan and had obeyed when God finally renamed him. When God changed his name to Abraham, he not only divorced him from his father's legacy but provided him his own great identity before God. His name was both a promise and a blessing. In the New Testament, specifically Revelation, Jesus promises to rename all of his brothers (his followers) in the next life, but the name will be private between each one and God.
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A great many of the names of people we find in the Book of Genesis have meanings quite relevant to the story of the persons concerned. For example, Abraham's son is called Isaac (Yitshaq), which means 'He Laughs', a reference to Abraham laughing when told that he will father a son at the age of one hundred years. Jacob (Ya'aqobh) literally means 'One That Takes By The Heel'(see Genesis 25:26), a derivative of 'aqebh (heel). As the story of Jacob progresses, his name is changed to Israel (Yisraβel), the meaning of which is unclear, but is often translated as 'Wrestled With God' or 'Striver With [or Against] God'.
As stated, Abram means 'Noble Father', or perhaps better, 'Exalted Father', while Abraham means 'Father of Many'. In a purely secular sense, it seems strange that Terah would name his own son 'Exalted Father' (Abram) but some scholars see a pre-biblical explanation that, being pre-biblical, is probably outside the scope of this question. As the story of Abram develops, his role as a father, or ancestor, of multitudes becomes relevant so, in line with common practice in the Book of Genesis of using meaningful names, his name changes to 'Father of Many' (Abraham).
Sarai certainly means 'Princess', but so does Sarah - not 'Princess of Many'. Robert B. Waltz says in The Bible in History page 190, that Sarai is simply a more archaic form of Sarah, and that both mean 'Princess'. Leon R. Kass supports this translation in The Beginning of Wisdom: Reading Genesis. The implication of this is that the references to Sarai date from a period of archaic Hebrew, whereas references to Sarah date from a later period, and that a Redactor explained the development as a decision by God. As the sister and wife of Abram, it is appropriate that her given name was 'Princess' (Sarai/Sarah).