iyers, i dont know where you were in 90-2 but the short-lived scene that was composed mainly of the early, guitar-effect heavy work of chapterhouse, ride, lush, slowdive and moose was definitely referred to as shoegazing (from their proclivity for spending more time looking at their effects pedals than the audience) at the time, together with the term 'scene that celebrates itself' (due to the fact that the bands all quoted each others' stuff as among the best out at the time). Sure, the term has been coopted since to include totally dissimilar bands like mazzy star and galaxie 500 amongst a million others, but i guess we cant control what later generations do with our own terminology, annoying as it may be for a while. That said falling down was obviously chosen as their first single due to its err 'groovy' (cringe..) wah wah, what with the indie dance thing still being so popular at the time, as you mention.
On it's release this was clearly an attempt to fit in with the tidal wave of what was known at the time as "indie-dance" mainly brought about by the likes of The Stone Roses, Paris Angels, Primal Scream and Happy Mondays et al mxing guitars with breakbeats...only later has the (intially joke term) shoegaze (note no r on the end) been liberally applied to this period of British Indie Rock by our American chums....
I had to get that off of my chest! :P
yeah, it has that twangy guitar sound, but there were several bands doing that around the time this and U2's 'Mysterious Ways' came out (The Farm, Black Grape, Electronic just to name a few). Guess it was one of those trademark sounds of the era ('91-'94)