Nu’ is too easily confounded with ‘new,’ and ‘Xi’ was not used because it is a common last name,
"Xi" is the name of the president of China so naming a virus variant after him wouldn't have gone down well. Most of the cases of the new variant were in unvaccinated people, so the present vaccine seems to offer some level of protection and most of the cases only had mild symptoms. With the start of the vaccination campaign being nearly a year ago, most people would be looking at another jab next year anyway. We're in a much better position to deal with the new variant now compared to being totally unprepared for the initial outbreak. Defences are up and we're learning how to live with COVID.