I haven't seen the show, but i'm guessing the Red Wedding would be the perfect cliffhanger to end the season with. It certainly plays a major part in the ongoing storyline.
Since they are splitting book three into two seasons, it probably is a good spot. People thought Ned getting his head chopped off was a big deal, but that ain't nothin compared to the Red Wedding. I have to wonder if people will drop the series over it, but I could imagine it would also drive book sales.
You should really read the books, dead0man - the show is a brilliant adaptation, but you miss out on a good deal of detail. The direwolves and dragons are much more prominent as well. There's also hints to things that have not been alluded to in the show.