Sure it sounds like this particular photographer is trying to get more money for prints, but that's been "standard" in the wedding business for decades, even before digital photography.
If the customer wants the source code, then by all means include it as part of your package, but along with that comes the complexities of copyright, support (do you still support code that your customer hired somebody else to mangle?), and other such concerns. These things come at a price.
Of course, how you do business is entirely up to you - but handing over the source code as part of the standard deal opens up a ton of questions which you should make sure you have covered.