I don't see why this would matter if the only person to see a nickname would be the person who named it. Name it what ever racist, Inappropriate, disgusting name you want...no one else will see it.
Honestly, while it's not something I ever utilized in any of the handheld games, nicknaming has always been a part of the pokemon experience. But yes, to keep things safe and friendly, I say keep the names hidden from others...that's the only problem I could see with it.