insanity1,
I used the same command just this week and had the same results.
But for 1 machine, it did return the instance name - this was my pc which has a named instance of SQL Server 2000 on it.
My guess is that if the instance is the default name MSSQLSERVER, it does not return the instance name. Not sure that's the reason though.
I get the same result when I use sqlcmd -L.
John