I would say you'd benefit more by contributing to a non-deductible IRA between now and 2010. When it comes time to calculate how much of the conversion is taxable, your Roth IRA and your 401k plan aren't counted.

My understanding is that your wife's SIMPLE IRA needs to be included when determining what percentage of your IRA conversion will be taxed. So a smaller percentage of her IRA money converted into a Roth would be protected from income taxes.

If you have an extra $8k, I don't think you can go wrong by contributing $4k into an IRA for both you and your spouse, even if you don't end up converting that money to a Roth in 2010.

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