My wife and I came to California in July and October 2007, respectively, and have not left the US since.

I filed single as non-resident for 2007 and my wife did not file (she had no tax liability)

We are looking to file married joint for 2008. Am I right in thinking that we would now file as resident? If so are there any forms that we need to file other than the 1040?

Thanks

You can even file 2007 tax return as residents.
Yes, you can file 2008 tax return as residents even if your wife has never been to the U.S. If she does not have SSN, attach W7 (ITIN application) with your tax return. Read Your U.S. Tax Return: Filing Status for Married (http://taxipay.blogspot.com/2008/02/filing-status-for-married.html)

Agreed; you could have filed jointly in 2007.

You may want to amend your 2007 return to so file AFTER you get her ITIN with the 2008 return.

She has an SSN (as she is now able to work a limited number of hours on campus)

We didn't file jointly for 2007 as I was under the impression that would entail us declaring all UK income (and tax paid thereon) for the part of 2007 that we were not in the US.

Does the substantial presence test have any relevance? We obviously have not been in the US for 31 days in the current year (yet) and 1/3 of 2008 plus 1/6 of our 2007 does not add up to 183. Or is this a red herring?

Give more info about dates you were present in the U.S. and your visa for 2006, 2007, 2008..

My wife arrived July 5th 2007 (F1) and I was here on visa waiver July 12th 2007 - September 9th 2007. Then arrived September 23rd 2007 on my H1b. Neither of us has been out of the country since.

We were here on holiday in January 2007 (2 weeks) and a total of 4 weeks holiday in 2006.

We have been in the country 27 days so far in 2009!

I hope that helps

Yes, you can file joint return as residents for 2008.
You can also amend your 2007 tax return to file joint return as residents.

You are correct about declaring your UK world-wide income for 2007, but you canalso claim the Foreign Tax Credit (Form 1116), so you may come out ahead.