Steps to reproduce: Create a new profile. Set browser.tabs.closeWindowWithLastTab to false. Visit any web page. Click Control-W (close) TWO TIMES (or more). Right click on the tab bar and select Undo Close Tab. Firefox 10.0 result: Last visited site is reloaded. Firefox 13.0a1/4-Feb-2012 result: The "new tab" window is shown. I tried setting browser.newtabpage.enabled to false, but that did not affect the Firefox 13 behavior. This was tested on new profiles, and Safe Mode makes no difference.
This no longer occurs in the latest Nightly. Repeated Control-W followed by undo close tab now opened the last tab closed, and repeated undo brings back prior closed tabs.