And God said to him, "Your name is Jacob; no longer shall your name be called Jacob, but Israel shall be your name." So he called his name Israel.
The structure of God's proclamation is interesting: he states how it currently is (your name is Jacob), he then says that this is finished (no longer shall your name be called Jacob), and finally he gives the new state (Israel shall be your name). This structure emphasises the major turning point in history which is taking place.
Just as God changed Abram's name to Abraham, he now changes Jacob's name to Israel. This is a momentous occasion where Jacob rises to the level of Abraham and his name lives on with Abraham and Isaac as a father of Israel, the nation.
The children of Jacob/Israel go on to become the heads of the 12 tribes of Israel, and the nation begins to explode in population during the following generations and their time in Egypt.