Is there any Drupal module which checks the username in the database, if its present then it should display some suggestions to be selected just like the yahoo or gmail gives on registration?
There is no module that does that. The closest you will find is the one that just checks if the username is available while registering. An example of such module is username check. To achieve the username suggestion bit, you may have to write a custom module for that.
This very simple module allows visitors to check username originality quickly using AJAX request during registration (completing registration form). This makes registration process more convenient as you don't need to submit your registration form to find out whether this username is already taken or not. This module is sensible to standard Drupal username validation as well as Access Rules validation.
Friendly Register module allows users to see if a username or email address has already been used during registration before they submit the form. This module checks the database and returns an error if the username is already in use. In addition to checking the username the module checks if there is already an account using that email address, if there is, a message is displayed with links to the login or reset password pages.