Hi, I came in US first time in Jan 2007 (26th Jan 2007) on L1 visa and my wife on 5th April 2007 on L2 visa and we are here for rest of full 2007. So, do I and my wife qualify the Substantial Presence Test for Tax return for year 2007 and are we resident aline or non-resident aline for year 2007.

For me

Number of Days in 2007: 340 (> 31 days)
1/3rd of Days in 2006: 0 (82/3)
1/6th of Days in 2005: 0 (0/6)

Total = 340 days (which is > 183 days)

For my wife

Number of Days in 2007: 271 (> 31 days)
1/3rd of Days in 2006: 0 (82/3)
1/6th of Days in 2005: 0 (0/6)

Total = 271 days (which is > 183 days)

Also, my wife don't have ITIN number, so I am filling form W7 alng with Federal Tax return 1040EZ form as "Married - Filing Jointly" and after I receive ITIN for my wife I will fill state returns.

Is what I will be doing correct? Or is there any thing different, I suppose to do?

Only if you file as Married Filing Jointly, then you can file as residents. You meet the 183 days test.
For 2008, you can file as Married Filing Jointly or Married Filing separately.

You are currently dual status aliens and must file a dual status return for 2007. However, you may file jointly and ELECT to be resident aliens for the full year. This necessitates including income from foreign sources on your US tax return, even in the period before you came to the US.