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Plywood shear wall, nailing, deflection

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I am designing a 2nd story addition above a residential garage 24'-8"
wide by 22'-8" deep.  It has a 6'-6" wide wall on one side to be the
shear wall.  Did the calculation and it need 1/2" STRUCTURAL I plywood,
perpendicular to the studs with 4x6 DF #1 sill and posts at each edge.

Assuming the shear to the wall is 2.79 kips.Uplift does not exceed 4.5
kips and so I am planning to use one Simpson Strong-tie's  PHD5 holddown
at each end.  The header is a  5-1/8"x12 glulam beam.  To minimize the
drift I am planning to using with 8d at 3" BN o.c.

Here are the values I used to calculated the deflectoin:
 max shear = 443 plf
 height = 8 ft
 width wall = 6.4 ft
 chord member area = 19.25 in^2
 da = 0.047 in
 en = 0.023 in
 effective thickness of plywood = 0.535 in
 E, chord member = 1700000  psi
 G, plywood = 90000 psi

Here is the result:
 deflection = 8*v*h^3/E*A*b + v*h/G*t + 0.75*h*en + h/b*da
 deflection from bending = 0.00866 in.   1.46%
 deflection from shear = 0.0736 in.   12.4%
 deflection from nail slip = 0.453 in.   76.2%   <<-------
 deflection from holddown slip = 0.0587 in.   9.9%
 sum of deflections = 0.594 inches

This deflection is still exceeding the drift limit.  But I used Rw=6 not
8 to calculate the base shear.

I have two questions:

1) Why is the nail slip accounts about 3/4 of the total deflection?
2) Do I need to require pre-drill the nail holes (4xs) to prevent the
nail splitting the 4xs?

Thanks

Sam Chang, SE
Cupertino, CA