I'll clear this up:
Formation Subs are in Madden 09 but they are only accessible through the playcall screen. For some reason the Madden team decided to eliminate being able to access this feature outside of the playcall screen. I go to "By Formation", scroll to the formation I want to sub, press Y and then select the player I want to sub out. For example, with the Packers Gbaja-Bamilia is a backup DE in on all Dime and Nickel formation plays. I set that up through the playcall screen.
So the bad news is that the only way to access this is through the play call menu.
The good news is formation subs are in the game and I just discovered that they carry over from week to week in a Franchise so you dont have to make the changes again and again every week.