Of course you don't have to use the bathroom in your child's presence, but observing a parent (especially a same-sex parent) using the toilet is one of the best ways to teach her how to do the same. Not only does observation answer a lot of your toddler's unvoiced questions about elimination, but soon the desire to mimic your behavior may spur her to actually ask to use the toilet and to switch from diapers to underwear.
Continue allowing her to observe you if you can avoid feeling too uncomfortable. If you feel, however, that your embarrassment is having a negative effect on your child, once she is old enough and ready to use the potty, consider having her observe another willing family member, or look to other methods (conversation, children's books, direct instruction) to familiarize her with the process.
Additional Information from HealthyChildren.org: