We discuss the Melosh spin rotation effects in diffractive photo- and electroproduction of heavy quarkonia off a nucleon target in the dipole picture. The quarkonium light-front wave functions are obtained in the Schroedinger equation based formalism using the realistic interquark interaction potentials. A strong onset of spin rotation effects predicted in the case of $J/\psi(1S)$ photoproduction enables us to reach a reasonable agreement with the available data. In the case of radially excited $2S$ and $3S$ states these effects are even stronger as a direct manifestation of the nodal structure of their wave functions. In particular, the spin effects enhance the $\Psi'(2S)$ cross section by a factor of $2-3$ and therefore cause a substantial increase of the $\Psi'(2S)$-to-$J/\Psi(1S)$ ratio improving the description of experimental data.