In 2008, my husband lived and worked in PA, while I worked in PA, but lived in NJ. We would like to file jointly for our federal taxes, but are not sure how to file for the state taxes. Should I file MFS for my NJ taxes, and he file MFS for his PA taxes or should we file using another option?

You will both report your PA incomes on PA tax return.
On the NJ tax return, you will report your PA income while your husband is nonresident of NJ and does not report his income on NJ tax return. On NJ tax return you will claim credit for taxes paid to PA.
Read : Your U.S. Tax Return: Working or Living in Two or More states (http://taxipay.blogspot.com/2008/06/working-in-two-or-more-states.html)