Rabbi Finman offers a simple and direct answer – that Ashkenazim generally name after deceased relatives while Sefardim will name after living relatives, but rarely parents.
The question does not indicate if the concern is with a Hebrew name which will be reserved for use on ritual occasions or a name which will be used out in the world. There may not be a difference as many people use their Hebrew names in their everyday world. Regardless, it is worth remembering that bestowing a name on a person is a sacred task. Names carry qualities of character with them. So when parents choose to name their child after a certain relative they carry that name, and the admirable characteristics they associate with it forward into the new generation.