yes, just tell him you love him whatever happens - this is true, right? - and he is free to make his own decisions in life, as all children do anyway. Don't go on at him about the 'family name' - whether he carries it on is now his decision, not yours; you've done your bit. (You never know, one of your daughters might have a child under her own name, or you might produce another son yourself...)
You don't need to broach the subject of gayness yourself, as it's his problem, not yours. But it is a problem - not nearly as much as it used to be, but there is still a lot of anti-gay feeling about
http://www.guardian.co.uk/media/2008/jun/24/as a.advertising
- and he will have to be prepared to deal with this. So you should assure him you will always be ready to provide comfort, support and unconditional love.