My wife moved to the US with me on December 5, 2008. I am on a H1B visa and my wife is on H4. She does not have a social security number. The firm which helped me to file my taxes last year is trying to charge me $350.00 to get an ITIN number for my wife. My question is, does my wife need an ITIN number to file for her tax returns for the year 2008? I read somewhere that she should have stayed at least for 31 days of the last month-December. Is this something that I need to do right away? Can I just fill the form myself and mail it to the IRS?

You can file joint return for 2008 even when your wife has never been to the U.S. You will both report your worldwide income for 2008.
You do not file W7 (ITIN application) separately. You attach it with your tax return. Download W7 and you can complete it yourself.
You will need notarized copies of passport as an attachment. Read about H1-B tax filing: http://taxipay.blogspot.com/2008/08/us-visas.html