You can follow either of two ways, but it depends on your lawyer with which he is comfortable.
In my case also, I faced this kind of situation. But I have choosen the attacking way, because my intetion is to proove that she is wrong and I want to file perjury later.
1. Denying all allegations : This is more of defencing side. As the burden is on the petitioner to prove, you can deny all the allegations. Here cross examination is the key for you. You have to use all your evidences here.
2. Explaining actual facts : This is more of attacking side. Here you can mention all the actual facts with the evidences. If you can file it with proper documentation, your wifes version will be changed in her chief affidavit. It will be an advantage for you.If she still submits her chief with the same false allegations, you ll have good chance to file perjury cases on her.
But it is always adviceble to go as per your advocate, because he is the person to handle it. Some times submitting all the evidences with counter will give chance for the petitioner to prepare for cross examination. That is why most of the advocates wont prefer this.