It would be cute, but it does tend to sound like the feminine name "Maddie" and every time I hear it I think of something being matted down. I don't know, maybe I'm just weird...
That's my brother's nickname and he's 10. It's not horrible and it makes him different to all the other Matts. He's never had any trouble with his nickname. I think it's a nice nickname. :)
While Maddy sounds like an okay nickname for a little girl, Matty is horrible for a little boy. Of course the name is far too infantile for anyone past the age of, well, 8. In American pronunciation, this sounds feminine, and thus weird on a boy.