Uh... no. Hobbit is a word Tolkien invented and isn't derived from anything as far as I know, although he did invent a phony etymology for it based on the Old English holbytla. The use of the word hob--which does serve as an element of hobgoblin--may have had a subconscious impact on Tolkien's invention of the word hobbit (see the discussion about the list of fey upthread) but that's certainly impossible to ascertain at this point. Hob was a nickname for the folklore fairy character Robin Goodfellow in origin.
What he said was that the use of goblin overall was a mistake; one which he tried to rectify in LotR by using orc almost exlcusively, and he bridged the two narratives by occasionally having the hobbits refer to orcs as goblins and played it off as a regional dialectical bit of hobbit-speech. He only used the word hobgoblin once IIRC in The Hobbit and did comment in Letters that his use of it implying a larger, stronger goblin was actually the opposite of what etymology should have produced and he regretted it for that reason only. At least based on what he said.