I friend of mine recently purchased a domain name and hosted it through godaddy. Another company with a similar name complained to godaddy and the company took their website offline. are they allowed to do this?
If the domain name is infringing upon the trademark rights of another company, or has copyright infringement issues with their content, then it violates the godaddy tos. You could move to another host, however, if this larger company thinks this domain is trademark infringement, they just might decide to sue the owner in court. It's impossible to know the exact reasons without the domain name and exact wording of the godaddy letter.
have your friend read the TOS. do not get the same domain as another company or trademark. i can't remember off the top of my head but i do remember godaddy also has something in their TOS about getting domains in bad faith or using it in bad faith.