Imagination is how we exercise our minds (and we all need a little exercise now and then) and creativity is important, or in the case of dreaming, it is how our subconscious mind works out certain "issues".
I would say then, that you can never can have too much imagination, provided it is not directed towards negative or immoral thoughts, or simply excessive non-productive "day dreaming" and wasting time, which of course in both cases would be counterproductive to good health and useful living (or to the point where it also gives you insomnia!).
"Where there is no vision, the people perish: but he that keepeth the law, happy is he." (Proverbs 29:18)
"The future belongs to those who believe in the beauty of their dreams." (Eleanor Roosevelt)
"If you can dream it, you can do it." (Walt Disney)