Ugh... my mind twisted and turned to quickly figure out how to gently explain the problem.
"Well... you know how sometimes there are different names for things. Puzzy sounds a lot like another word and that word is another name for vagina". There was dead silence from the back seat. "That is why I don't want you to use that word, ok"? Quietly from the back seat I hear, "ok".
I don't think I will hear that word again.