Actor Jeff DeMunn who played Dale wanted out of the show due to AMC ousting show runner and creator Frank Darabont, so AMC cut him loose and ordered the writers to kill off Dale. Durabont was upset by AMC slashing the budget for the show in the second season despite the show being a huge hit. As such a major pissing contest went on and Durabont lost his job. Walking Dead was his baby and he personally brought in DeMunn, Melisa McBride and Jon Bernthal who played Shane.
Darabont and AMC are now in huge lawsuit that rivals the Peter Jackson/New Line lawsuit over the LOTR films. Don't look for it to be settled for a while.
The character of Shane had to be killed off. His "arc" had peaked and there wasn't much left for him to do. You can't fool around with the lead characters wife and have it end well when the lead returns after being presumed dead. Not to mention the whole "who is the father of the baby" sub plot. Sad as it was Shane had to go to the great Zombie Zone in the sky. Dale though could have stayed but loyalty and ego's said otherwise.
To me the show is as good as ever and so far the ratings reflect that as well. No question the first 2 season cut new ground but the writing and acting is still tops in my book. As always your mileage might vary and who knows what this season might bring. The show runners run a very tight ship and not much leaks out about what is going to happen. Looking forward to Sunday myself..... Someone if going to meet "Lucille" and probably the only person it won't be is Rick. Then again... WHO KNOWS??????????