In the early generation, the people of religion and knowledge, which included the scholars and the worshipers were called ‘the reader.’ Later, people invented the word ‘As-Sufiya’ (Sufis) and ‘al-Fuqarah’ (the poor). The name Sufiya is derived from the word, Suf, i.e. wool and its origin is the wearing of woolen clothes.
This is the correct derivation; other than this, all other suggested derivations for the word ‘Sufiya’ are fake, like it is said that it is derived from, Sufah Ibn Murr Ibn Add Ibn Taabika, a tribe of Arabs known for the worship and devotions, or the people who stayed in as-Suffa in the Prophet’s Masjid, or as-Safaa (clarity and purity), As-Sufwah (the purest), or as-Saff (row) meaning the front row that is the closest to Allah’s Messenger (sallallahu alaihi wa-sallam).
Ashaab as-Suffa (the people of the Suffa): As-Suffa was an area in the northern parts of the Prophet’s Masjid, where stayed the newcomers, who did not have family or friends in Medina with whom they could stay. When these people found accommodation somewhere else, they would leave as-Suffa for another place. People who stayed in Suffa included people from all sectors and their number would increase and decrease. They did not have any particular characteristics of knowledge, nor did they belong to any specific people of knowledge and piety. In fact, among them was one who turned back from Islam and was killed by Allah’s Messenger (sallallahu alaihi wa-sallam). In Saheeh al-Bukharee, it is related a story of a group of Arabs. The climate of Medina did not suit them, so the Prophet ordered them to follow his shepherd, i.e. his camels, and drink their milk and urine (as a medicine). So they followed the shepherd, that is, the camels and drank their milk and urine till their bodies became healthy. Then they killed the shepherd and drove away the camels. When the news reached the Prophet (sallallahu alaihi wa-sallam), he sent some people in their pursuit. When they were brought, he cut their hands and feet and their eyes were branded with heated pieces of iron. So, as-Suffa was inhabited by all kinds of people and also some best of the Muslim like Sad Ibn Waqqas (radhi allahu anhu) and Abu Hurayrah (radhi allahu anhu).
[Excerpts from the Criterion between the Allies of the Merciful and the Allies of the Devil by Shaikh al-Islam Ibn Taymiyyah]
 Saheeh al-Bukharee (vol: 7. no: 590) and (vol: 4, no: 261).
 The scholar Abdur-Rahman Salmi has collected a history of those who spent time in As-Suffa.