The game does spell it Pangaea, and that seems to have recently become the most popular spelling in print too.
But both spellings are in my dictionary, and as recently as the early 90s when I was starting to take geology classes, Pangea was still the more common spelling in the US. I learned it that way, actually, and only switched to the the "pangaea" spelling because it seemed stuffy and foreign, and I was into the whole being-a-pompous-ass thing at the time.
As to the etymology, the people who spell it Pangea tend to claim pan + geos, the people who go for Pangaea tend to claim pan + Gaia. YNCS's dictionary seems to be the first to mix and match that I have run across.