yea, there should be no rule on what you can and can not name your kid. however i strongly disagree that the store is "discriminating" against them. i guess if you want to get technical you could consider it "discrimination against discriminators". but because somebody came in and requested a cake for an "adolf hitler cambell" with previous requests of swazticas on it does not in anyway show that they discriminate, it shows they don't tolerate dumb ass racists. the fact the kid's name is adolf hitler ( not just adolf, but adolf hitler) just throws up red flags that the parents are either racist or just too stupid to get the meaning of that name. if the kids name was "rommel" i doubt that would have raised any suspicion.
if you were the store owner would you make a cake for an "osama bin laden" with a plane crashing into two towers? the name should not matter so much, but if they want racist / offensive images that should be enough incentive to not make it.