Tim,
Explain a little for me your wife's requirements in terms of what types of photos, how often, and how large her prints will be as well as for what use.
You'll want to get a printer that you can use a refill kit with and get good results. Consumables (as mentioned above) are where the printer manufacturer makes money.
I've owned an HP Photosmart 7150 for a few years now. Technology has improved but that produced very good prints. I've used ink refill kits that reduce the per print size to a reasonable amount. I've found good sources for Ilford matte printing paper. I also have good recommendations regarding a rotary cutter.
That all said, I don't print too much of my own stuff as much any more for one simple reason: Time. In order to save money you have to refill and, it's not unusually cumbersome, but more work than I want to invest sometimes. Frankly I print almost exclusively at online printing services like DotPhoto. Even Costco has such a service. These services even have downloadable ICC profiles to colormatch your workspace and get consistent results. Finally, the archive quality is much better because most inkjets suffer from color loss over time.
Frankly, the time lost waiting a couple of days to receive your prints in the mail after you upload and pay for them is minimal compared to the convenience.
If you want my real recommendation, it's nice to have a good color printer for the occassional must have color capability but I use my color printer now for printing out documents and rarely print photos any more.
