The neon sign does say "Tom's Restaurant," but just on one side (the left, from Seinfeld perspective). In some episodes the "Tom's" is cropped out, and in others it is hidden by camera angles.
Incidentally, I had lunch at Tom's last week when I was in the City. It's at 112th Street and Broadway, near Columbia U. The astute Seinfeld viewer will notice how the set of Monk's does not match the exterior shot of Tom's, and that holds true when one actually goes in Tom's. It's not nearly as nice as the Monk's set, but it is a very authentic, typical NYC greasy-spoon. Good club sandwiches.
Pete