Okay, here's more to get you started.
I made a site where I used a plugin called post-image.
My index.php basically looked like this:
<?php get_header(); ?>
<div id="content_centered">
<?php
if (is_home()) {
$page = (get_query_var('paged')) ? get_query_var('paged') : 1;
query_posts("cat=-3&showposts=1&paged=$page");
}
?>
<?php if (have_posts()) : while (have_posts()) : the_post(); ?>
<div class="entry">
<div class="entrycontent">
<?php post_image(); ?><?php the_content(); ?>
</div>
</div>
<?php endwhile; ?>
<?php
$nextlink="<img src=".get_bloginfo('stylesheet_directory')."/img/next.gif width=21 height=24>";
$prevlink="<img src=".get_bloginfo('stylesheet_directory')."/img/prev.gif width=21 height=24>";
?>
<div id="prevlink"><?php previous_posts_link($prevlink) ?><?php next_post_link('%link', $prevlink, TRUE); ?></div>
<div id="nextlink"><?php next_posts_link($nextlink) ?><?php previous_post_link('%link', $nextlink, TRUE); ?></div>
<?php endif; ?>
</div>
<?php get_footer(); ?>
So, what I would do with your site is this:
<?php get_header(); ?>
<div id="content_centered">
<?php
if (is_home()) {
$page = (get_query_var('paged')) ? get_query_var('paged') : 1;
query_posts("cat=-3&showposts=1&paged=$page");
}
?>
<?php if (have_posts()) : while (have_posts()) : the_post(); ?>
<div class="entry">
<div class="entrycontent">
<?php
$nextlink=php post_image();
?>
<?php next_posts_link($nextlink) ?><?php previous_post_link('%link', $nextlink, TRUE); ?>
<?php the_content(); ?>
<?php edit_post_link('Edit','', ''); ?>
</div>
</div>
<?php endwhile; endif; ?>
</div>
<?php get_footer(); ?>
To be honest, I can't remember why I needed to use "next_posts_link" and "previous_post_link" in the same line, but you'll figure it out :)
EDIT: grrr ... change all the "& amp;" to just &