I like both :)
Not my style on either name.
Many old names sound old mannish when introduced to a new generation. Names like William, Oliver, Henry, Alexander, were all old sounding names at one time. Now there are too many! Same for names like Claire, Emma, Matilda, were all names our great grandmothers had as classmates. I love both names.....Arabella and Wallace. I also like Ace for a Wallace nn. Both names have a romantic flair, while strong, and unique!
When I saw the post heading, I was smitten! Wally is definitely the sort of old-man name that is getting used on little ones these days. I think Wallace is rather stately, and would go so well with a beautifully named sister Arabella. Both sound very English :)
Edit: As with the above poster, Ace is a great nickname to offer him if he feels like Wally is too nerdy, haha