Firstly I can definitely understand why people do this. It's a nice tribute and can be a way to carry on family names through generations.
But my personal opinion is that a child is a new entity and deserves their own individual name. And it should be a name both parents like.
My dp has mentioned using his fathers name as a middle name for our baby due in February. But it's very much an old fashioned name and not one that is ever going to come back into popularity. I won't say the actual name but think along the lines of Colin, Barry, Gary, Trevor, Keith, Roger...that sort of thing. I just don't like the name, it doesn't go with any of the first names I like and don't think it would suit a baby.
Fwiw I've lost my dad too and I wouldn't use his name for the exact same reason.
Aibu to feel like this? I realise it's a sensitive subject and don't want to discount Dp's wishes but also don't want my child to end up with a name I don't like!