1- I am an F1 student from India. I came to the US in Aug 2003 and hence am a resident alien for tax purposes.

2- I got married in 2007 and my wife was on F2 visa all of 2008.

3- On the W-2 that I received from my university, it says my taxable marital
Status is "SINGLE". They withheld income tax for single with 1 federal exemption.

4- Should I file my tax as "Single" or "Married, filing jointly" (my wife has a SSN)? If married filing jointly, can we claim two deductions ($17,900)?

Please advise.

You can only file as married filing jointly or married filing separately.
It does not make any difference what is on W2.

Yes, you can claim double standard deduction and double exemption if you elect to file jointly.

Thanks a lot for your replies.