said by ChrisJT:
I save every major step of my editing because PS7 only records the last 20 steps in its history
No that is only PS7's DEFAULT history setting, you can make it anything you want depending on how much memory and resources you want to devote to Photoshop. (I have mine set to 30)
Check in the Edit/preferences settings... note that the dialog box is multiple pages, and that setting is a few in.