OP used "New" in title of an app and now complains about Google enforcing the clearly stated rules?
This has nothing to do with the question if Google should have the right to set these rules. If the are somewhat like a monopoly in the app market (at least for Android) or of any (maybe rightly to make) argument against Google's businesses practices.
As far as I can learn from the posting and one comment Google not only has every right to shut down the account, but must do so not to ensure that others would point this out as an example and argue for their apps to be allowed these words in the title.
And that would probably make the whole crappy app store even worse for the end user/consumer.