I love a bit of an upset at a session, it's part of their dynamic.....I think it   would be pretty dull to have nothing to have a light hearted whinge, or better still, laugh about.
I was once in a sesh in Ennis, there was a guy playing spoons over the top of the most beautiful slow airs. A man began a lovely song and, sure enough, in comes spoonboy, the singer just started laughing. I enjoy playing tunes *and accompanying them, I love to hear a good song (even a bad one), most of all I love to see and be part of a situation like that one, people at their best, being humans ABOVE musicians.   
Of course there are all the times you just want to sing the songs or play the tunes, Personally I wouldn't tell anyone to shut up but I think the best approach is the one your wife took, a quiet "shh"
I dont know why they persisted, hurt pride I suppose. If someone "shhhed" my playing I would be quite hurt, although I am very sensitive to different styles and I think I have a good idea of when my accompanying of a singer will be appropriate (or not).
The same thing happened with a session I went to for years, a player, out of time and super loud, I believe sessions are about practice and sharing, it was a bit loud though...Nobody told her, nobody made a huge thing of it, she stopped coming anyway......the point of my post has presently scampered off like an errant, naughty puppy. I'd better put up posters now and contact the pound.
muhkuhpuh