"ե + ւ" -> "և" replacement has been done in Armenian writing ever since small caps were invented (around 10th century).
Here are pictures of a few ancient handwritten Armenian manuscripts:
every single one of them uses «և» ligature.
Here is a page from the first Armenian book: (printed in 1666 in Amsterdam)
and again it uses «և» (among many other ligatures).
In fact in Grabar if «ե + ւ» is written as «ե ւ» it is pronounced as "yo" or "yu" for example «ե ւթ» is pronounced as "yot" (number 7) or «հարե ւր» (haryur -> "hundred"). However, whenever it was supposed to be pronounced as "ev" it was always written as one symbol և․ This is a basic rule of Classical (Grabar) Armenian, Middle Armenian, and also the modern Eastern and Western Armenian.
«ե ւ» type of writing is a fairly recent invention. I assume it was caused by the fact that old PC software was not able to deal with ligatures very well.
Սահակ 01:31, 21 July 2008 (PDT)