The division of Germany did not end well. With the USSR being uncooperative, (the Berlin Blockade) the other Allies decided to separate Germany into two halves - West Germany, consisting of France's, Great Britain's, and the US's portions of Germany, and East Germany, with only the Soviet Union's part.
Since the capital of Germany was in the Soviet's side, the Allies felt nervous about letting the USSR control all of the city. So they decided to split the city up, also - East Berlin and West Berlin.
The wall went up literally overnight. The night of August 12, 1961, the people of Berlin went to bed peacefully. The next morning, they woke up to see a wall completely dividing their city into two.
Although the western part of the capital was in Soviet Union territory, it was still free of Communism. It was still very hard for its inhabitants, though, because they were surrounded by USSR troops all around.
This event especially signified the distinction between the US and the USSR - they could not even get along enough to unite Germany or even its capital.