This actually isn't that bad, but I think Fairy suits the countertype with Dragon better. I have no problem with the name other than the fact that it makes me think they should all have wings, because I've yet to see a Fairy without wings.
It's not, I think Fairy is too restrictive too. Elf is worse though because it just doesn't accurately describe any Pokemon really. I can't think of any actual elf Pokemon. I don't like the name Fairy but at least there are definitively fairy Pokemon.
Magic/Mystic would be better. As it is, people are ridiculously loosely defining the word fairy, calling any sort of mythological creature fairies. With Magic/Mystic, doing that would at least make sense, although people would still suggest too many Pokemon for it.