Silvia Plath uses "Daddy" in the poem for its rhythmic effect and powerful connotation.  In the poem, Plath uses alliteration and repetition, well, repeatedly in lines such as "Panzer-man, panzer-man" and "wars, wars, wars"and of course the final line of "Daddy, daddy, you bastard, I'm through."  The word "Daddy" also has the repeating 'd' sounds which also add to the rhythm of the poem, mirroring perhaps the angry pounding of the mob of villagers "dancing and stamping" on Plath's father.

Plath also uses "Daddy" for its connotation to create irony.  "Daddy" is another name for father, a softer version, one used by small children.  It has all the connotation of tenderness and being an endearment, one saved for a father with whom the speaker has a close relationship or cares about deeply.  Her use of "Daddy" is ironic, because her father has been everything but a true "daddy; their relationship is hostile and unforgiving.  Plath uses the endearment as yet another jab at her father, comparing him to the sort of man she wishes he had been and lamenting the fact that he never was.