I tend to frown at silly names, but I've never prevented them. Heck, I've even introduced some.
But, interestingly, I've found that silly names will loose their silliness when the overall campaign isn't silly.
For instance, we were taking a break from our usual D&D game and someone offered to run a one-shot Star Wars (d6) adventure. In a fit of silliness, I named my wookie smuggler, Harry. Yes, "hairy wookie." (Also,
Harry and the Hendersons.)
The ship Harry owned and piloted was one of the standard offerings in the rule book. We thought the illustration looked like a flying turtle, so we named it
Gamera.
That one-shot adventure was not silly. A couple months later, we decided to go back to that Star Wars game and play an extended campaign. Harry and the
Gamera were primary characters (the PC captain and the ship our party was based around). The initial silliness of the names was completely forgotten almost immediately. When another player joined our game, he chuckled at first about "hairy wookie" and "the flying turtle," but then dropped it.
Also, consider how silly "Chewy" is for a wookie name. Does that name detract from Chewbacca's cool badassitude once the initial chuckle passes? Did you even ever chuckle at the silly name when you first heard it in
A New Hope?
Basically, a silly name can be completely negated by a good, strong campaign. A weak campaign is one which can be disrupted because of one silly name.
Bullgrit