(2) And God spoke unto Israel in the visions of the night, and said: ‘Jacob, Jacob.’ And he said: ‘Here am I.’
It is not intended that the name Jacob shall be obliterated, but that Israel will be fundamental and Jacob secondary. Similarly the Scriptures state, "Remember ye not the former things, neither consider the things of old" (Is. xliii. 18) — "Remember ye not the former things," i.e. the servitude of the kingdoms, "neither consider the things of old," i.e. the exodus from Egypt. "Behold I will do a new thing ; now shall it spring forth" (ibid. V. 19). Rab Joseph taught : This refers to the war of Gog and Magog. A parable : to what is this like ? To a man walking by the way, when a wolf attacked him and he was rescued from it ; then he is fond of relating his adventure with the wolf. [Later on] a lion attacked him and he was rescued from it ; so he is fond of relating his adventure with the lion. [After that] a serpent attacked him and he was rescued from it ; so he forgets his two previous adventures, and relates the incident of the serpent. So is it also with Israel ; later troubles cause the former to be forgotten. "Abram, the same is Abraham" (I Chron. i. 27). At first he was made the father of Aram, but subsequently the father of all the universe. Sarai, the same is Sarah. At first she was made princess of her own people, but subsequently princess of all the universe Bar Kappara taught : Whoever calls Abraham " Abram " transgresses a command ; as it is said, "Thy name shall be Abraham" (Gen. xvii. 5). R. Eliezer says: He transgresses a prohibition ; as it is said, "Thy name shall no more be called Abram" (ibid.). But now, can this also apply to one who calls Sarah "Sarai"? In her case the Holy One, blessed be He, said to Abraham, "As for Sarai thy wife, thou shalt not call her name Sarai, but Sarah shall her name be" (ibid. v. 15). Does it likewise apply to one who calls Jacob "Jacob"? No; it is different here, because the Scriptures afterwards repeat [his old name] ; as it is written, "And God spoke unto Israel in the visions of the night, and said, Jacob, Jacob" (ibid. xlvi. 2).
(טו) אע"פ שחוזר וקרא אברהם אברם אינו לגנאי אלא לשבח ליהושע הושע אינו לגנאי אלא לשבח הוא אברם עד שלא נדבר עמו הוא אברם משנדבר עמו הוא הושע עד שלא נכנס לגדולה הוא הושע משנכנס לגדולה משה משה אברהם אברהם יעקב יעקב שמואל שמואל כולן לשון חבה לשון זרוז. הן הן עד שלא נדבר עמהן והן הן משנדבר עמהן הן הן עד שלא נכנסו לגדולה והן הן משנכנסו לגדולה.
(15) Even though [the Tanach] goes back and calls Avraham [(Genesis 17:5)], Avram [again], [(Nehemiah 9:7) and (I Chronicles 1:27)] it is in his praise and not in his shame. To Yehoshua [(Numbers 13:16)], Hoshea [again], [(Deuteronomy 32:44)] it is in his praise and not in his shame. He is [the same] Avram before [God] spoke to him, he is the [the same] Avram after [God] spoke to him. He is [the same] Hoshea before he became great , he is [the same] Hoshea after he became great. Moshe, Moshe [(Exodus 2:3)]; Avraham, Avraham [Genesis 22:11)]; Yakov, Yakov [(Genesis 46:2)]; Shmuel, Shmuel [(I Samuel 3:10)]; [all of these double expressions] are expressions of love and encouragement. They are [the same people] before [God] spoke to them and they are [the same people] after [God] spoke to them. They are [the same people] before they became great, they are [the same people] after they became great.
Jacob and Israel are two different names, with two different meanings. While it is true that Israel represents a loftier state of being than Jacob (thus the Israel element in Jacob is "no longer Jacob"), there are certain virtues to the Jacob state that the Israel state cannot possess. So Jacob remains a name for both the third Patriarch and for the Jewish people as a whole. Israel might represent a higher stage in our development than Jacob, but the greatness of the Jewish people lies in that there are both Jacob Jews and Israel Jews, and Jacob and Israel elements within each individual.
In the second of Balaam's curses-turned-blessings, there is a verse in which he proclaims: "[G‑d] sees no guilt in Jacob, nor toil in Israel." This implies that Jacob does experience toil, though his struggles and difficulties do not result in his guilt in the eyes of G‑d. Israel, on the other hand, enjoys a tranquil existence, devoid not only of guilt but also of toil.
(based on a teaching by Rabbi Menachem Mendel Schneerson)