What
ryano refers to is the
diaeresis, from the
Greek for `to
divide'; or, in French,
trema. The use of the diaeresis in English is disappearing, especially in
America (how often do you see the word `
coöperate' anymore?). It is still common in
French,
Dutch, and other more
phonetic languages. (Yes, I am calling French `phonetic'.
Deal.)
`Umlaut' (see the Webster 1913 definition below) refers to the sound change the symbol represents. Umlaut as it occurs in Germanic langauges generally causes a back vowel to become fronter, and often higher.
See also ablaut, a different kind of vowel shift that is less patently Germanic (but is still patently Indo-European).