Your name might be uneuphonic, difficult to spell or pronounce, or very long. The same reason a lot of performance artists use stage names.
You might use different names when writing in different genres. Genre readers are pretty picky, and if you put the same name on all your books, bookstores may not stock as many of your titles. Publishing imprints work on this principle.
If you get caught in the midlist death spiral (which is definitely caused by an algorithm, though I'm still going back and forth on whether it's a bad algorithm even by the shortsighted standards of big business), changing your pseudonymn can be an effective way to fool the algorithm and reboot your career. Publishing imprints also contain elements of fooling bookstores' algorithms.
Finally, you might want to avoid prejudice. Still common is the girl cooties theory of literature which holds that certain genres are intrinsically less macho than others, and has as a subtext the idea that hard SF written by women can never achieve the synthetic-diamond hardness of hard SF written by men. So a lot of women use their initials or gender-neutral or male pseudonyms. (Attempting to defeat the GCToL can also lead to overcompensating within the story.)
Through the workshop I got wildly varying assessments of my story's position on the Mohr scale of science fiction, and I'm pretty sure this had to do, not with the GCToL directly, but different readers' perception of the mass market's perception of the GCToL.
Despite the not-terribly-surprising fact that the vast majority of people who write SF under their initials are women (there was a survey on this topic but I can't find a link), readers tend to assume that unless the writer's unambiguously feminine name is spelled out for them, the writer is male (different survey, ditto on link). I guess even thinking about it requires confronting the prejudice.
It's still a little early for me to be picking out my science fiction pseudonym, but I'm considering writing under my initials 1) out of solidarity with female SF writers, and 2) to avoid confusion with the two nonfiction books already published under my full name. However, it's difficult for me to pass up an opportunity to sow confusion.
(3) Sun Oct 07 2007 07:20 Pseudonyms:
This is a pretty easy one to start with. Patrick Nielsen Hayden said at one point that writers need to be brands, and for this entry I'm going to take that very literally. A writer's name is a brand, the same way a publishing imprint is a brand. There are many reasons for putting a name on your writing that's not the one on your birth certificate, but they all have to do with branding.