You can check to see what your "Maximum number of history
steps" is set to in the General category of Preferences, but "2" is
the minimum possible with CS3.
When you try to undo or redo, make sure you have the correct
file selected in DW. For instance, you can't undo a change made to
index.html if style.css is selected. That would simply undo the
last change made to the style sheet if "undo" is available. It
won't be available if no changes have been made to the file in the
currently selected tab.