After importing an image or a sequence, Undo does not undo the action. Instead, it repeats the last action.
I.e., with a single imported image, it inserts that image again, at the cursor position (the following frame).
If a sequence has been imported, Undo will repeat the insertion of each image, one at a time, going back through the sequence.
This is the case whether using Ctr+Z , or Undo in the Edit menu. Ctrl+Z seems to work fine otherwise.
I’m using what I assume is the latest version, by the way: v0.6.5.