SO...In the past couple of days, I did some more research on the sauce/gravy debate. Here is what I've found
I reported here that my aunt's husband's family was from Italy (southern Italy region). My uncle was born and raised in New Orleans, but his mother was born in Italy, so I wrong about his being 3rd generation. My aunt/uncle refer to it as "gravy", specifically, red gravy. I am waiting to hear back from her about whether my uncle's mother has always called it that.
Foxhound's family (his father's father) was FROM Italy, about 40 minutes from Naples, where his grandfather was born. They left Italy and ended up in CT and FH reports that his grandfather/father have always called it "sauce".
Foxhound has a BIL whose family is from Sicily - not sure what generation came from there, (I think his BIL's mother was born in Italy) but they live here in MD now. THEY have always called it "gravy" and FH said the whole family on that side has.
I am lifelong friends with an Italian family that MY family was close to when I lived in Naples, Italy. Their son and youngest daughter are friends of mine on FB. In a twist of serendipity, the youngest daughter lives in Maryland. She manages an Italian restaurant. So, I messaged her today on FB and asked her what SHE called it in her family. (sauce or gravy) She replied "saucccce!- NOT gravy"! I asked her for HER Italian word for it and she replied "salsa". She said gravy was an "Americano" word.
The little bit of Googling I did on the topic turned up some interesting tidbits. It seems as though most of the families who call it "gravy" began doing so when they immigrated, for various reasons. Not sure how accurate this is. Anyhoo - it is very interesting to hear everyone's version of these words and reading about the family customs and stories!