The central problem of galaxy formation is understanding the cooling and condensation of gas in dark matter halos. It is now clear that to match observations this requires further physics than the simple assumptions of single phase gas cooling. A model of multi-phase cooling (Maller & Bullock 2004) can successfully account for the upper cutoff in the masses of galaxies and provides a natural explanation of many types of absorption systems (Mo & Miralda-Escude 1996). Absorption systems are our best probes of the gaseous content of galaxy halos and therefore provide important constraints on models for gas cooling into galaxies. All physical processes that effect gas cooling redistribute gas and therefore are detectable in absorption systems. Detailed studies of the nature of gas in galaxy halos using absorption systems are crucial for building a correct theory of galaxy formation.