We propose a physical model which explains the existence of finite thicknes
s wetting layers in epitaxially strained films. The finite wetting layer is
shown to be stable due to the variation of the nonlinear elastic free ener
gy with film thickness. We show that anisotropic surface tension gives rise
to a metastable enlarged wetting layer. The perturbation amplitude needed
to destabilize this wetting layer decreases with increasing lattice mismatc
h. We observe the development of faceted islands in unstable films.