With Mpeg2Schnitt (that's german for Cut..) you can cut your Mpeg-2 files right away without re-encoding. It's a free app.
http://www.doom9.org/Soft21/DigiTV/Mpeg2Schnitt071.zip
As setarip_old says, TMPGEnc DVD Author is a simple and effective way to cut and author your mpeg-2 files. But it's not free though, except the trial version. If you're not intressted in creating your own menus and such, then
IfoEdit is a free and simple DVD authoring program.