I have set up a category page in the mandigo theme
with the following
query_posts('posts_per_page=16'); // user wants 16 posts on this page only
and another category page
category-5.php with no code changes
in both cases when using the pagination options at the bottom of the page the content remains the same, the output offset does not seem to be getting processed, however it is precessed on the (default) home page which was used as the base of the category pages.