Where does the term ZED come from?

[Ciaran Zagami]

and why is it always spelled in all caps?

[vega]

i think they took the name from shaun of the dead where they refer to zombies as zeds. don't quote me on that though.

[ULTRA]

It's the Zombie Survival Guide, actually. Zed is the first letter of the word 'zombie'. So, zed.

[armaghgeddon™]

"Z" is pronounced "zed" in britain, where most of the original KF took place. Zombie starts with Z, so they call them zeds.

[marcelFX]

The British and others pronounce “z”, “zed”, owing to the origin of the letter “z”, the Greek letter “Zeta”. This gave rise to the Old French “zede”, which resulted in the English “zed” around the 15th century.
With you google it : ZED means "Zombie" but in the KF case it means experiments with people or you can call it test subjects.
eg:
Gordon Penrose (aka Dr. Zed), Canadian science educator
also The Z notation /ˈzɛd/ is a formal specification language used for describing and modelling computing systems.

[Raven]

Basically they call them Zs