I rename where I really do not like the name, or where it is somilar to a "proper" name, or where the Villager looks like someone I know and I will give tham that name.
I find it annoying to have two Villagers turn up with the same name. They should be able to stop that in the program. Also annoying is a distinctive Villager which has one name in one game, and then they turn up with a different name in the next game. That should be able to be stopped, -perhaps something for VV3.