  Transformation of disks into spheroids via mergers is a well-accepted element
of galaxy formation models. However, recent simulations have shown that bulge
formation is suppressed in increasingly gas-rich mergers. We investigate the
global implications of these results in a cosmological framework, using
independent approaches: empirical halo-occupation models (where galaxies are
populated in halos according to observations) and semi-analytic models. In
both, ignoring the effects of gas in mergers leads to the over-production of
spheroids: low and intermediate-mass galaxies are predicted to be
bulge-dominated (B/T~0.5 at <10^10 M_sun), with almost no bulgeless systems),
even if they have avoided major mergers. Including the different physical
behavior of gas in mergers immediately leads to a dramatic change: bulge
formation is suppressed in low-mass galaxies, observed to be gas-rich (giving
B/T~0.1 at <10^10 M_sun, with a number of bulgeless galaxies in good agreement
with observations). Simulations and analytic models which neglect the
similarity-breaking behavior of gas have difficulty reproducing the strong
observed morphology-mass relation. However, the observed dependence of gas
fractions on mass, combined with suppression of bulge formation in gas-rich
mergers, naturally leads to the observed trends. Discrepancies between
observations and models that ignore the role of gas increase with redshift; in
models that treat gas properly, galaxies are predicted to be less
bulge-dominated at high redshifts, in agreement with the observations. We
discuss implications for the global bulge mass density and future observational
tests.
