Just a quick question, when I use my Illustrator I can "ctrl Z" to go back an almost unlimited times, but in PS CS3, I can only go back once. Is there a setting I'm missing?

I don't know what the key strokes are on a PC, but on a Mac, command-z gives you one undo, whereas command-option-z lets you step backwards several times. Look under the "edit" menu.

PS has the only decent history panel it's easy enough to go back using that, you can change the amount of history you can go back in options, i set mine to 50 default is 20

on PC
Ctrl-Alt-Z (step backward)
Ctrl-Shift-Z (step forward)

as Splodge said - the undo's are not unlimited, but set in Preferences - Performance

I need 100

Okay, in Illustrator, I can go back (ctrl-z) multiple times to return to a specific state instead or opening the history state panel. BUT in Photoshop, it only allows (1)one "go back". Is that correct or do I have to go to history panel everytime just to go back only a couple of change or Edit/go back?

Wahoooo!!! ctrl-alt-z works!!!!!!!

PS and AI are different in more ways than one. Sometimes it looks like they were made by different companies. To sum it up:

In Illustrator:
Ctrl-Z = undo, undo, undo, etc. (same as step backward in PS)
Ctrl-Shift-Z = redo, redo, redo (same as step forward in PS)

In Photoshop
Ctrl-Z = undo, redo, undo, redo (useful to see the effects of the last command)
Ctrl-Alt-Z = undo, undo, undo, undo (same as Ctrl-Z in AI, but up to the limit set in Preferences)
Ctrl-Shift-Z = redo, redo redo (same as Redo in Illustrator, gasp)