I am a US citizen and work in the US. My wife just received her green card in January 2009. She works for IndiaAir and lived mostly in India for 2008. Can I file MFJ and not claim her income in 2008 since she didn't have a green card?

If you file MFJ for 2008 you must show her 2008 worldwide income on your U.S. tax return. You can claim foreign tax credits for taxes paid to India and may be able to claim the foreign earned income exclusion under the bona fide residence test by relying on the nondiscrimation clause of the U.S.-India Income Tax Treaty.

If she did not meet the substantial presence test for 2008, you can file married filing separately and she does not need to file at all if she does not have any U.S. income. Also, if she does not have any U.S. source income and you file separately, you can claim an exemption on your tax return for her.

If you file separately, you may not be able to claim exemption for your spouse if she had income in 2008.
Filing joint return should save you tax.