I have this problem on CiviCRM 4.6.8 with Joomla, and reproduced on the demo server.
If I rename an activity (from Administer->Customize Data->Activity Types) used for a Timeline within CiviCase, I can't figure out how to get the activity label to update in the backend or frontend of CiviCase. Even if I remove the activity from the timeline and try to re-add it, it uses the original name.
Is there any way to rename it without deleting the Activity type and creating a new one?