Take your wife to test ride it. Also convince her to test ride other bikes. My wife has the same attitude as yours toward spending money so she only wanted to ride the low-end stuff. I convinced her to ride about everything they had in her size. In the end, I could see that the Ultegra-equipped road bike was her favorite but way more than she would be willing to pay. Told her we'd "sleep on it" over the weekend. Went down the next day and bought it for her. She was a bit upset when I showed up with it but I told her the cost would soon be forgotten but she'd be reminded on every ride if she went for a low-end bike. Almost 3 years later she still loves the bike.

As for size, my wife is 5' 9" and rides an 18" framed MTB and 54cm WSD road bike.