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Monica is a name that will grow with a child from a girl to a woman. It is dignified, beautiful, feminine, and classy. You could even say elegant. It has a certain weight and substance to it that Kelly does not. Kelly, in my opinion, does not age very well. Monica will sound good on her daughter 20, 30, 40+ years from now and into her old age, regardless of naming trends in the future. Kelly? Not so much. I think it sounds best as a surname and should have remained as such. :P

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Definitely choose Monica! Plus, Monica comes with a great namesake patron saint: Saint Monica, mother of Saint Augustine. Of course your sister may not care about that (I have no way of knowing), but it certainly is another good thing about the name Monica. :)