First of all you don’t need a submit button 
Of you want to do more, but for the autocomplete you don’t need it.
here some explainations..
in application/config/database.php find these lines:
$db['default']['hostname'] = "localhost";
$db['default']['username'] = "root"; // username
$db['default']['password'] = ""; // your password.
$db['default']['database'] = " alumni"; // here your databasename
$db['default']['dbdriver'] = "mysql";
$db['default']['dbprefix'] = "";
$db['default']['pconnect'] = TRUE;
$db['default']['db_debug'] = FALSE;
$db['default']['cache_on'] = FALSE;
$db['default']['cachedir'] = "";
$db['default']['char_set'] = "utf8";
$db['default']['dbcollat'] = "utf8_general_ci";
$db['default']['swap_pre'] = "";
$db['default']['autoinit'] = TRUE;
$db['default']['stricton'] = FALSE;
then change the line in /application/config/autoload.php
$autoload['libraries'] = array('database');
Now you have alway’s connection to the database.
So this wil work right now 
Json and ajax is a little to complicated to explain in English for me.
But what Json do, is crating an array like in php. Something like:
$foo = array('foo' =>'bar', 'some' =>'thing');
The javascript does a call to the controller in my example here:
$.ajax({ url: "<?php echo site_url('welcome/suggestions'); ?>",
When there are sugestions, then you get the result back.
Mind, you need to whipe out this line:
$query = $this->db->get('autocomplete');
The database query looks like this:
$this->db->select('fname');
$this->db->like('fname', $options['keyword'], 'after');
$query = $this->db->get('alumni');
//produces somthing like: SELECT fname FROM alumni LIKE fname = '".$_POST[keyword]."%'
Hope this help you a little?