I use both my daughter's formal name and her nickname (think Jessica and Jess) and she doesn't seem confused

She, however, self identifies with the nickname. I also call her sweetie, sweetheart, etc., and that doesn't confuse her either. I wouldn't worry.
I think actually ONLY using the nickname or ONLY the formal name can cause confusion later. I was always known by my nickname and NOBODY ever called me by my formal name. Now that I am a professional, my formal name is on my business cards and I have a hard time remembering that people are talking to me if they use my formal name because even colleagues usually use the nickname (think Liz for Elizabeth).