I started working on my H1 in Oct-2007. So I became resident in 2008. Started the year 2008 as a non-resident alien.

1. Do I have to file 2008 taxes as a dual-status alient or a resident alien?

2. My wife came to US in March, 2008. Can I file jointly with her. If not, then if I file separately, should she even file taxes as she did not have any US income in 2008.

Please help.

You can file resident tax return as Married Filing Jointly. You will get standard deduction of $10,900 and exemptions for both.

You must both declare your worldwide income for 2008. If you have any foreign income, and on that income you paid taxes in the foreign country, then you can claim foreign tax credit.

You will complete forms W7 (application for ITIN) for your spouse and children and attach with your tax return.

If you decide to file as Married Filing Jointly as First Year Choice, you must attach a statement signed by both of you to your return stating that you qualify to file as residents as First Year Choice and that you CHOOSE to file this way.
Read about H1-B tax filing: Your U.S. Tax Return: The U.S. Visas (http://taxipay.blogspot.com/2008/08/us-visas.html)

You are confused about what it means to be non-resident. If you meet the SPT in 2008 which definintely appears to be the case, then you are a resident alien for 2008.

If you want to file a joint return, your wife needs to include her income from outside the US.