Judging from reading about other users with similar problems, my first theory is: there's an issue with my permalinks interfering with my next_posts_link, previous_posts_link functions. Second theory: a mod rewrite issue.
home.php looks like this:
<div id="homecontentnav"> <div id="prevLink"><p><?php previous_posts_link(); ?></p></div> <div id="nextLink"><p><?php next_posts_link(); ?></p></div> </div>
And the URL the function spits out looks like: http://mydomain.com/page/2/
"Front page displays" = Your latest posts
"Blog pages show at most" = 10, but only 7 posts ever appear on the site - the 7 most recent posts, even if I click Next Page.
permalink structure is custom = /%postname%/
Any ideas would be appreciated, thanks!