Could it be M$ changed that number from 10 in previous Windows versions to 1 (ONE)?
Create a new folder. Create 11 new documents of whatever type is handy in your context menu. Delete them one after the other. Now undo each deletion using the "Undo" command or CTRL + Z.
In Win7 x64, I can only undo the last deletion. After that, only "Redo" is available from the menu.
In Windows XP, I can undo 10 deletions (just checked & counted), like it's supposed to be since Win95. (See Microsoft article here)
If this is normal behavior for Win 7, I'd appreciate a hint at how to change it - registry hacks or third party utilities, no matter.
P.S. I'm running with Classic Shell and Classic Explorer installed.