Hi

I am on H1b visa for the whole 2007 my wife is on H4 and we had a baby in August who is a us citizen. I want to know which forms do I have to file, i.e 1040 as a resident alien or 1040NR. Which one will give me more deductions and do I get child credit if I file form 1040NR. I am from, india so do I get any tax treaty deduction.
Since I am on h1 visa do I have to pay for social security and medicare taxes also. On my w2 they are taking both medicare and social security tax from my income, even though ia m not a us citizen or a green card do I get these refunded or not.

You will file as residents form 1040 Married Filing Jointly. You will also claim deduction for your child. You will also get $1000 as child tax credit.
Yes, you pay FICA taxes; you don't have choice. H1-B is considered dual intend visa.