If Sahuaro is wrong, why do people spell it that way???

Answer 1

Because in Spanish the "g" sometimes sounds like an "h". If you don't want to sound like a gringo (and here the "g" sounds like a "g") then it helps if you pronounce the word correctly.

Answer 2

The spelling of Arizona's state flower was changed from "Sahuara" to "Saguaro" in current law, however many places, even in Arizona, have streets, high schools, and parks that were named before the state changed it. In any event, state governments can only change the official use (like in reference to the state flower), not the accepted usage otherwise.