I think you are from toronto, right?
I live in BC and the rules for toronto might be different.
I went to vital statistics agency and submitted my application to get legal name change in Canada.
fingerprints were done.
then i got my legal name change certificate.
Then i went to service canada to get my name changed on sin card, then drivers license office to get drivers license changed and then i sent letter to health insurance british columbia to change my name on health card and then went to banks to change my name.
They all required to see my new name change certificate.
Then i filled in request to change PR card and got my new pr card to change my name.
Then applied with indian consulate to change my indian passport's name (it was all according to indian rules) like getting newspaper advertisement etc in two newspapers and waiting for atleast one month before i apply and indian consulate people wanted to have me change my pr card name before i change my name on indian passport.
Now it was in early 2012. now the rules might be different.
The whole process took almost 6 months (i dont remember exactly)
good luck.
You can legally change your name right now and send details to CIC once your name is changed while your application is in process.
This is what the link says:
http://www.cic.gc.ca/english/information/applications/guides/CIT0002ETOC.asp
Important information: Once processing of your application has begun a name change can only be made due to an administrative error made by the Department, a truncated (shortened) name on the immigration document or a legal change of name.
I don't see any issues with your old name affecting your citizenship application. however, cic may request more information in future if they feel necessary, may be fingerprint request just to be sure.