Can a reviewer suggest literature for improving the language?
Certainly, poor English is a significant problem, one that hinders communication, and undoubtedly has an impact on one's ability to publish top-quality articles.

It may sound a bit rude to make such a suggestion, but in extreme cases I think it is warranted. It's probably better and more cost effective than trying to improve the English yourself and better in the long run than  simply ignoring the problem (and suggesting to reject the paper).