Blog page only loading page 1

My front page displays a static page (‘Blog’ template), with 10 posts per page, but when I click ‘next’ or page 2, it just loads page 1 again (the link changes to page/2).

I believe the problem is with this code in the ‘template-blog.php’:

<?php
	  $paged = (get_query_var('paged')) ? get_query_var('paged') : 1;
	  query_posts(array('post_type' => 'post', 'paged'=>$paged));
	  if(have_posts()) : while(have_posts()): the_post();
	 ?>

I’ve done many searches, but no fix worked. The website is http://tactusmusic.net. Any help would be much appreciated.