It's okay. I don't mind it, especially if it's a nickname, but I don't think it's all that appealing. Too much like jelly. I prefer
Sherry or even
Kelly. Something about the spelling bugs me, too.
Shelley looks better, I guess, but it also seems sort of pretentiously literary and surnamey.
Shelly as a nick for
Michelle ... but I don't like the change from C to S.