I managed to duplicate your issue. Got to Options > Document Properties > Drawing Sheets and see if "Use different sheet format" is checked. If it is then when you select a new format as you described it will not change. If you unselect it the format will change. Try unchecking it and see what happens.
Nice work Dennis. Unchecking that does allow us to change the sheet format (of Sheet 1).
However we'd like to keep it checked so that sheet 2 is a different format (without Revision block, etc).
I guess the work-around will be to uncheck that box when changing the overall format, and then check it again before we add extra sheets.
Unless someone can think of a better way? Or SW fixes this somewhat buggy behavior.
I agree Chris,,, I have managed to set my template up (I was much smarter then) to, when I start a new drawing, both sheet 1 (with title block etc.) and sheet 2 are in the template. That way when I go from sheet 1 to sheet 2 I can just add new sheets with the sheet 2 format. That has been working well for years. This is the way my drawing template opens.
If I don't need additional sheets I just delete sheet 2
Edit:... Just wanted to add that if you do it this way you do want Sheet format for new sheets checked. That way all new sheets have that format.