I just installed the Slingbox Mobile app on my Wife's 3GS.
I can launch the app, login and see a list with my DVR (although I have 2) and my local channels. When I tap an item in the list, the screen changes and I see a note about connecting to the Slingbox.
Then the app crashes and boots me out to my app icons.
It seems that you are having some issues with the SlingPlayer Mobile application on your wife's iPhone, since it crashes.
I recommend you to uninstall and reinstall the SlingPlayer Mobile application on her iPhone and test the connection one more time. If you do not know how to, just check this link.