Let's see if I got this right.
Your wife used her upgrade on her line to get the 4S, but she's actually taking your iPhone 4, and you're ditching her 3GS?
In this scenario, you would take the microsim out of your iPhone 4, and put it in the 4S before you even power on the 4S.
Then you take your wife to AT&T and have them make a microsim for her line and pop that in the iPhone 4 and you're good to go.