Can we create Indexes on a view in SQL Server 2008? I have heard about indexed view, which can give performance improvement, but the problem is data refresh on those views: Can it be auto updated, once data in base tables changes?
Indexed views are always in sync with the data in the underlying tables. You can read more about indexed views here.
Be careful going overly enthusiastic with indexed views: they can be a real performance killer on heavily written tables.