My OH choose his sisters name, there is about 8 years between them but she ended up with Corrina. I'm convinced it's why they don't get on now.
When I was pregnant with Tink we had narrowed down to 5 names and I didn't want to tell anyone our choices, but he went and told his mum and nan so we got all the negatives to each name. I said "if people are worried what the kids will call them, lets ask the kids" so I spoke to my brothers oldest 3, made sure they could say all the names and asked what they liked. My niece said "I like Tinkerbelle the best" meaning Isobel, I checked with her she could say Isobel and that was the name she liked and she said "Isobel, yes, but I like Tinkerbelle the best". The next day (day before she was born lol) OH spoke to his sons, told them they were going to have a sister and asked them about the names, they also liked Isobel best. I was pleased because it was the name I liked best.
I found out later that Isobel was the fulfilment of her sisters name. We called her sister (born alive at 20 weeks and lived 3 hours) Lily-Hope which when you look into the meaning is a promise of another child, Isobel is "gift from God".
My nephew wanted to call his brother either Nemo or his own name - he wasn't called either in the end!
My aunt named my uncle. He doesn't like his first name and uses his middle name. My aunt always used her middle name because that's what my grandparents wanted her called but didn't think her name worked with the other way around. My aunt always called my uncle by his first name and he would do the same to her. It was the cause of a few cross words between them!
I would be careful about letting a child name their sibling. If you want them to feel involved let them know your shortlist, but if they come up with a decent suggestion that you have no objections to, then go for it, use it as a middle name if you're not totally sure.