In reply to Cog:
I have seen this as well.
If FB is informed of someone's death using the memorialisation request form, they will turn the deceased person's FB page into a memorial page. This means that the person will no longer appear as a suggested contact and it locks down a lot of the settings so that only friends of the deceased can see the account and deactivates the log in. It removes personal information (email addresses etc) but it leaves the wall intact so friends of the deceased can still see it and post to it in memoria.
Sadly, I don't think this facility is well known; there are at least two people that I know to be deceased who regularly show up as suggested contacts for me.