<?php if (have_posts()) : ?>
     <?php $paged = (get_query_var('paged')) ? get_query_var('paged') : 1; query_posts("category_name=somecat&paged=$paged"); ?>
        <?php while (have_posts()) : the_post(); ?>

http://stylizedweb.com/2008/08/13/query_posts-pagination-problem/

Replace standard query_posts with the snippet to enable pagination on pages with a custom loop. Be sure to change out "somecat" with your category or add additional query arguments.

query_posts() Pagination problem | StylizedWeb.com

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