I know this is quite old so I doubt you still need this answered but perhaps it will be useful to someone else.
Just last week I had to build a control like does this for us. It's basically two main parts, a JSON service that accepts partial text and returns a list of suggestions and the HTML/CSS/jQuery+UI control.
The service is pretty straightforward so we'll skip over that here.
I'm in the process of doing a write-up on the web side but basically we wrapped the jQuery autocomplete with some custom CSS to make an input that is similar to the address line in GMail. This was done by styling a container div to look like a long input field. The actual input field is within that container and styled to be essentially invisible. Clicking in the container moves focus to the input box. Upon selecting a suggested name, I create a new container to insert before the 'cloaked' autocomplete input which contains the user name and a hidden input with our desired value to send along when the form is submitted. I had to do some other overloads on the autocomplete to get it to act consistently but essentially this is all there was to it.
The control looks at the container for a data-input-name attribute to figure out what 'name' to set the hidden inputs to when they are created with each user pick. When the form is submitted the default model binder rolls all the users of a particular picker (since you can have multiple on a page) into string arrays of the values - assuming your model has string array properties with the same name as used by the input controls - which we can then process on the server side.
By far the hardest part was figuring out the right HTML + CSS to get the look and feel right. I'm not a very strong UI person so this took me forever and still falls down in Chrome which seems to add an accent around input boxes even with (or because of?) styles which make it blend into the parent control.
For our purposes it's been working great over the last week.
UPDATE: It's now on GitHub with a Demo.