No I don't use the word naughty to describe my children. I tend to talk to my children in a positive way, even if they have been misbehaving.
If they have been naughty, I will talk to them and ask them why they are acting in such a way, and talk to them why we don't do certain things, how certain things make people feel, I'll ask them how they would feel if someone did the same things go them (if situation is appropriate, such as hitting, biting, name calling etc). I find they can take something positive from me while I am still guiding and disciplining them.