DH and I have settled on Tamsin as a first name for our baby girl, due in a few weeks. We'd like her middle name to be May, for DH's grandmother (his mum's mum), who died when DH was a child so I never met her, but all his family talks about her with such love. We haven't told anyone the names, although we did say baby was a girl. This is our second child and we hadn't found out the gender with DS, nor did we tell anyone our names until he was born, but there wasn't the same family connection - just DH's first name was used as DS's middle name, which is traditional on both sides of the family.
It's just occurred to me, after reading some of the threads about relatives being upset about the use of deceased family member's names for new babies, should we ask MIL if it is ok with her to use her mum's name? We never thought it would be more than a nice surprise, but maybe that was inconsiderate and she should be asked.