I was "Paco" for most of my childhood. My middle name is Francis, which in Spanish is Francisco and that got shortened to Paco. How exactly that came about I can't say.
At my college (high school for you yanks), it was traditional for one to have two nicknames. You were known by your surname to the teachers and people who didn't know you well, by one of your nicknames to most of your friends, and by another to your very closest friends. For example, the majority of people either called me "Smith" or "Smithy". Only about five people were ever allowed to call me "Smudger".
Nowadays, I only ever get called by my first name.