Hello, I am on H1 visa for 5 years including 2011. My wife was a student on F1 in 2011. We got married in July 2011. Can we file jointly for 2011 taxes? Her university is adamant on her filing as NR. Though I saw many couples on this forum and outside filing jointly to claim max deductions.
Is there any sticky case for such scenario? What are the adverse consequences? Any feedback or sharing of experience is much appreciated.

Yes, you can file joint return as residents.

Any U.S. citizen or resident can file joint return even when the spouse is nonresident alien and even when spouse has never been to U.S. http://www.irs.gov/businesses/small/international/article/0,,id=96370,00.html