On H-1B your wife would be H-4, and you still can't work as H-4. Whether you're on TN-1 or H-1B your employer can still sponsor you for permanent residency, it's just a little bit more tricky with TN-1 because it's not dual-intent.
The question is whether your employer is willing to file an I-140 for you and how long it will take to be approved. Most skilled people fall into EB-3 Skilled Worker which takes roughly (this a guess) 3.5 years for a visa number to come up and best part of a year to adjust status. Depends on the demand for visas, which I suspect is going to go down rapidly over the next couple of years.
Your employer has to get labour certification for the job before they can sponsor you, which is described here:
http://www.foreignlaborcert.doleta.gov/perm.cfmObviously with the recession it's going to get harder for them to argue they can't find anyone locally. You need certification for H-1B as well, but I can't see any real point going to it in your case.
Steve.