In terms of storytelling, what makes this town an appropriate choice for Pi's upbringing in Life of Pi?

Pondicherry, India is a city with a very diverse population. It has changed hands frequently between the French and the British, but it is now Indian. It is also a tourist destination and is home to many different religions.
Because of this, Pi is able to find "teachers" so he can learn about many different religions. The fact that he spent his childhood in close proximity to many zoo animals also serves to highlight this feeling of diversity.
It is not a stretch for Pi to think about his fellow castaways as animals since he is used to diversity and is able to believe two different things at the same time—just like he does when learning and believing in three different religions at once.