Single.php and permalinks

Hello, I am creating a custom theme and having trouble displaying a post with single.php,

Here is what it looks like currently..

<?php if (have_posts()) : while (have_posts()) : the_post(); ?>
<?php post_class('',$post_id); ?>

<h1><?php the_title(); ?></h1>

<?php the_content(); ?>
<?php comments_template(); ?>

<?php endwhile; else: ?>

<p>Sorry, no posts matched your criteria.</p>

<?php endif; ?>

It works fine as long as permalink structure is ?p=1

But when I change permalink to anything else then none of my future posts work for some reason

Any help is greatly appreciated.