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Solidus and Ocelot believed the S3 Plan to mean "Solid Snake Simulation". The purpose being to make soldiers to be like Snake. The S3 plan is actually much bigger in scope.
S3 actually stands for "Selection for Societal Sanity". It's purpose is manipulate people and world events. The Big Shell was just a test for the program, being a recreation of the Shadow Moses incident (Shadow Moses was chosen because of its extreme circumstances); the reasoning being that if Raiden could be manipulated into being Snake and be led to go through the Big Shell like it was Shadow Moses, then the program could handle any situation.
[Edited on 12.10.2012 3:53 PM PST]