Texas has no income tax. I know as a pa residident I have to pay pa taxes, but it says not to use the wages in box 1 on w2. What should I use? Also I read I may have to pay penalties and interest because I didn't make estimated payments earlier in the year.

You should use the number in Box 1. You may owe interest to PA due to lack of payment of 2009 income taxes throughout 2009, but there are loopholes (for example, if you owe more in 2009 than you paid in 2008 you may not owe any interest at all). There shouldn't be any penalty imposed - just interest (if that).