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This is a hot button topic for me. Its a big problem in my games. I find it extremely annoying as both a player and a DM. In the campaign I run, I keep the names relatively simple, usually historical and avoid using long or overly difficult fantasy names. That still doesn't stop players from purposefully mispronouncing the name to turn it into some tongue in cheek reference, or applying a nickname to someone based on some pop culture reference. Eventually, you become afraid to name anyone anything for fear of it becoming a joke. It breaks the ambience and disrupts the role playing, and it often lead to disruptions, endless side comments, inane potty humor, and distracting jokes. After numerous times, I find the players no longer take the NPC seriously, and go as far as calling the NPC by the nickname while role playing because they can't remember what their actual name is. As a player, it's annoying when you're trying to respect the DM and role play to their NPC, only to have someone next to you making stupid comments every time the NPC is mentioned.
There's really no way around it that I've seen work, except to show your displeasure and say something about it. Lately I've taken to having NPCs take insult to it when it happens in character. That's soured many an NPC relationship and cost them a few allies. When the do it to an enemy, I bounce their CR up one or two until they take them seriously. Still, it happens. When it leads to disruptive behavior I stop the game and go do something else until they get the point. Or I just come out and ask them how old they are and if they're finished.
In-character nick names are fine if they are legitimate (not pop culture or stupid references to potty humor) and role played.