The SHADOW folder, at the root of the Document Library, contains previous versions of the documents that existed in the Document Library at the time of backup. If you select the SHADOW folder to include in a Document Library backup, you can have access to the previous versions of the documents. However, you cannot restore the previous versions directly back into the Document Library. You must restore them to an alternate location and then manually copy them into the Document Library.
To restore previous versions of SharePoint 2007 documents from document library (Web storage system-based) backups