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Katie is cute and fine. It's perfectly usable. I would never use it as a name in its own right, just as a nickname for Katherine. Katherine is beautiful and Katie is cute, so why not Katherine nn Katie? It's preferable in certain circumstances to have a more formal sounding name. Katherine looks better than Katie on job applications and such, and, though it may be unfair, I think a Katherine would be taken more seriously than a Katie. I think your daughter would thank you for naming her Katherine formally and calling her Katie, rather than putting Katie on the birth certificate.