pagination is not working in wordpress main page

hello there all i have a proplem that we are using one of the new themes called fancy theme the theme comes with a proplem in pagination now we are trying to fix that problem as you see here http://www.uniblues.com/ when you press page 1,2,3 it redirects you to the same page no change only the url changes too http://www.uniblues.com/page/3/or /4 , /5 according to the page number you press here is the code that the theme uses ..

<?php 
   //query_posts('paged='.$paged);
   $temp = $wp_query;
   $wp_query= null;
   $wp_query = new WP_Query();
   $wp_query->query('showposts=7');
   ?>    

any ideas ?? .. thanks

in case if some body wants to now how i manged to did this i simply used this code and it's done ..

global $query_string;
parse_str( $query_string, $my_query_array );
$paged = ( isset( $my_query_array['paged'] ) && !empty( $my_query_array['paged'] ) ) ? $my_query_array['paged'] : 1;
query_posts('post_type=post&posts_per_page=7&paged='.$paged);
                        ?>    

and it works like charm .. thanks all