Adobe has released a replacement plugin to fix an issue where layers aren't imported correctly when opening DXF or DWG files. Here's the information from Adobe:
This updated plug-in creates layers in Illustrator CS3 that correspond to the layers in the DXF or DWG file and imports the objects in the corresponding layer. However, because of differences in the way layers are treated in Illustrator and AutoCAD, object stacking order may change after importing a DXF or DWG file with this plug-in.
Install this optional plug-in only if you want to maintain the layer hierarchy while opening a DXFor DWG file in Illustrator CS3. This plug-in works for all languages and operating systems that meet the minimum system requirements for Adobe Illustrator CS3.
If you never import DXF or DWG files, then there's no need for you to install the plugin. If you do require this fix, please read the information and instructions carefully. Apparently, it's very important to first remove the older plugin before installing the new one.
Information and a link to the download can be found here.