It's true it's a fairly common Spanish name (or was), but unfortunately now it has taken on a different meaning and it is cruel to brand a child with a name that will cause teasing and upset.
If I liked thre name I would if I didn't then I wouldn't. One novel doesn't alter the entire connotation of a name... otherwise you wouldn't get the odd Magdelena, Jezzebel etc.
I don't personally like lolita as a name, but up to the parents, I don't think it'll handicap the child in any way.