Paged (Older posts) issue

Hi, I’m using Toothpaste for a site I’m developing, it works fine, however, on the static fron page I’m building, the Older posts/Newer posts feature don’t seem to work:
I’m using an out of the box loop.php file with your page builder, it displays the posts and and the older posts link, yet the /?paged=2 url won’t display older posts, it displays the same lot as the front page.
Any idea where I might screwed up? I tried and uploaded a backup, still don’t seem to work.