I use fanfic or fanfiction, because it's a new word, it's easier to type, and it's somehow more distinct from the individual meanings of 'fan' and 'fiction'. Fanfiction is more than just fan fiction, fiction by fans. I dunno what more it is in terms of what I would put in a dictionary, but it's definitely more. I like it.

As for how it sounds, "fan fiction", to me, seems like someone attempting to translate the word for a mainstream audience. Which could be acafannish or could be noobish, but I wouldn't assume anything. I would think it looks wrong though.