The episode title refers to a quote attributed to W.C. Fields. It's said that Fields joked that his epitaph should read, "On the Whole, I'd Rather Be in Philadelphia", a play on an old vaudeville joke that comedians would rather be dead than play Philadelphia. Later, Ronald Reagan made the same joke in his hospital room after an assassination attempt against him. He was scheduled to visit Philadelphia on the day of the shooting and told his nurse, "All in all, I'd rather be in Philadelphia."
While in the hospital waiting room, Emily samples a box of Milk Duds, and asks why they are called "duds", remarking: "it seems a rather counterintuitive name for a type of candy." Lorelai, Rory, And Logan can't supply the answer.
But the real reason that Milk Duds were called "duds" is that when they first began manufacturing them (back in 1928), they didn't come out the way the creators had planned. They originally wanted to make them perfect, round spheres, and instead they ended up as the rather lumpy, irregularly-shaped pieces we know today. Hence, Milk "Duds".