I am beginning to disagree with the single-character convention, after using it since the mid-1990s.
I find the readable names more readable. This is helpful in understanding both the implementation and interface of generic types.
The ambiguity problem seems overstated for Java. Few class names are all-uppercase. Constants are not used in the same context as class names.
It's true that the @param JavaDoc elements can provide a longer description. But it's also true that the JavaDocs are not necessarily visible. (For example, there's a content assist in Eclipse that shows the type parameter names.)
For example, compare :
public final class EventProducer<L extends IEventListener<E>,E>
implements IEventProducer<L,E> {
to:
public final class EventProducer<LISTENER extends IEventListener<EVENT>,EVENT>
implements IEventProducer<LISTENER, EVENT> {
Although the single-character names have been recommended as a convention by Sun/Oracle, conventions can be changed. The consequences of challenging this convention are minor. If you and your team prefer meaningful names for your type parameters, I personally would go for it.
Edit (2015)
Google style for Java allows both single-letter names and multi-character class-like names ending in T.
5.2.8 Type variable names
Each type variable is named in one of two styles:
A single capital letter, optionally followed by a single numeral (such as E, T, X, T2)
A name in the form used for classes (see Section 5.2.2, Class names), followed by the capital letter T (examples: RequestT,
FooBarT).