I've always been told the baby can lay on a nerve or something, if you elevate yourself a bit than laying on your back is fine :)
It also slows blood flow to the baby.
Yup, ftmomma25 has it right. Baby's weight especially in the late stages can compress major blood vessels which may not make you super uncomfortable but can restrict blood flow (and with it, nutrients and oxygen) to the placenta. At least make sure you're shifted to one side or the other, with a pillow under your hip, if you can't get comfortable on your side.
Uterus squashes the main blood vessel, I get so dizzy lying on my back! (For scans ect)
I cant sleep unless im on my back .. doc told me that the baby will let u no if somethings wrong .