Hallucinations are already associated with a type of behavior, which is (roughly defined) "subjectively seeing/hearing things which aren't there". This is an input-level error, not the right umbrella term for the majority of errors happening with LLMs, many if which are at output-level.
I don't know what would be a better term, but we should distinguish between different semantic errors, such as:
- confabulating, i.e., recalling distorted or misinterpreted memories;
- lying, i.e., intentionally misrepresenting an event or memory;
- bullshitting, i.e., presenting a version without regard for the truth or provenance; etc.
I'm sure someone already made a better taxonomy, and hallucination is OK for normal public discussions, but I'm not sure why the distinctions aren't made in supposedly more serious works.