I would take a leaf out of the Hipmunk android mobile app for finding flights (and hotels). Pictures below are taken from the video on the Android Market page for this app.
On the initial screen is a box for departure and destination points.
You tap the box and a screen appears where you can start typing the name. A few recent selections may appear below already, in the event that you have 'been here before'.
As you type, a list of options appears underneath in a scrollable list of good finger height buttons for you to choose one.
If you tap on an item in the list it is selected immediately - or if you swipe/scroll the list, the virtual keyboard is hidden, giving you more space to view the list of items.
When you select an option you are immediately returned to the form where your selection is entered into the box.
If instead of selecting one from the list, you simply select done from the virtual keyboard, then the first item in the list is taken.
Note that this involves a number of steps in in order to get to the final name, which you might initially think seems more involved than necessary - but actually, provided the experience is seamless and frictionless, and the user doesn't have to think about anything, then users are happy to make one or two extra simple steps in a process.
You don't have to try and reduce the complexity down to a single click experience - you just have to make it easy. This approach also significantly reduces the clutter around the form itself because you are not needing to provide in-place selection.
Although these screenshots are taken from an app rather than a mobile website, a very similar process can still be achieved.
As another consideration - you may have a hierarchy of information such that it may make sense to select an Area first and then a Suburb, at which point you only need to provide a list of the suburbs that are appropriate for the given area. This depends on what other information you are gathering at the same time. The method above is simple enough that it may actually still be significantly easier to select a suburb rather than an area and then a suburb even though there are less options at each point.