Absolutely! Don’t assume because the individuals with whom you have been working are familiar with your performance that you should treat the interview as anything but a formal meeting. The goal of the interview is to position yourself in the best possible light and demonstrate to your colleagues that you possess the greatest level of professional acumen and decorum. When you interview for a position internally you should treat is it as if you are interviewing for a brand new position. You want to showcase that of all the internal candidates you are the “best suited” to take on this role (pun intended).
In addition the suit will command a distinct response from your coworkers who may be more accustomed to seeing you in more casual attire. It also demonstrates to them that you take the new role seriously. You know the saying goes “Dress for the position that you want.” The worst case scenario is that you will be over dressed and if you believe the suit is excessive you can always remove your jacket.