The following EU countries are all full signatories to the Schengen Agreement:
Austria, Belgium, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain and Sweden.
Additionally, Norway and Iceland (which are not in the EU) are full signatories to the Agreement. Switzerland (which is also outside the EU) will move to full implementation of the Agreement on 29 March this year.
Anyone successfully applying for a visa to any one of those 25 countries will be issued with a 'Schengen visa', which is valid for travel to all 25 countries. Your wife would not require an additional visa unless she travelled to a 'non-Schengen' country. There are very few of those; Leichtenstein is expected to join the group in November. Cyprus also aim to join this year. Bulgaria and Romania hope to join around 2011 . Travel to the smaller states is already possible anyway, since Monaco is treated as part of France for Schengen purposes, the Vatican City state is effectively part of Italy and San Marino has an open border with Italy.
Chris