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If you use Arletta, and you only like Letty, be prepared for her friends and even her to call her something you hate. I can't think of what: Use your imagination.

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Gwendolen Eve may make her feel not left out, but unique and special to not be named for a family member. I myself am named for a family member and I hate it. It's a much prettier name and having your initials spell a word is rumored to give good luck. If you and your DH both love it, I say go for it.