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I like both, but I prefer Margaret because it's never been either viral nor neglected (though it's pretty well neglected right now, come to think of it). Also, the hard g prevents it from sounding like margarine.

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I like Maggie and Peggy. They could hardly be more different, but that's fine: if one doesn't suit a little Margaret, the other surely will. Where I live, the standard nn for Margaret is Margie, pronounced with a hard g as in Margaret, not a j sound as in Margery. And I really cannot enjoy it at all.

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One of my great-grandmothers had Margaret as her middle name, and a cousin on the other side of the family married a lovely Marjorie. If I had to choose, I'd use Margaret.