I've seen a couple of themes with 3 columns but didn't see exactly how this was done. Is it a css function or it this handled in the theme index.php or in the template-functions.php?

It's probably done in the CSS, but if you want to do something with a "count of three" in the PHP, you can just use a counter and increment it each time, then you know which image you're on in the while(next_image()): loop.

But it's much easier to just put them each in a DIV and make the widths so they fall into three columns. Much much easier and more elegant. I recommend that.

i was trying to figure this out as well, it is in the css file. find where in your css it controls the width of the "boxes" where your thumbnails are. for me:

/* Album Thumbnails
------------------------------ */
#albums {
float: left;
margin-bottom: 12px;
}
.album {
margin: 0 12px 12px 0;
padding: 10px 8px 8px 10px;
float: left;
[b]width: 305px; <----- make this width smaller and you'll get more columns[/b]
border: 1px solid #444;
background: #333;
line-height: 100%;
}