Before the war, Novac was pretty much a motel and the name stems from the "No Vacancy" sign in the front, which simply reads "No Vac," after having lost its last four letters in the blast. Jeannie May Crawford, who is in charge of the motel is responsible for providing you with a permanent Dino Dee-Lite Hotel Room key.
The town of Novac is a stopping point in the main quest in Fallout: New Vegas. There are several quests that start here and several more throughout the game that bring The Courier back to this town. The Courier also meets Craig Boone here and, after a quest, can have him join up as a companion.