Help my navigation is not paging as expected

I have created a blog. The Category is blog. I have successfully created a blog.php template bag that has the loop in it that shows my posts.

I want it to show a specific number of posts per page. So if I end up with 22 posts and show 10 per page I will have 3 pages with navigation at the bottom that scrolls through the pages. So far I have added 6 posts to test & asked it to show 2 per page – this works.

I have added navigation but when I click the links I simply get my single.php page with the previous or next single post on not the page showing the previous 2 posts. Does that make sense. Can anyone point me to an article or web help or simply help me with this problem?

Here is the code

<?php if (query_posts('cat=blog&showposts=2'.'&paged='.$paged)) : ?>
    <?php $count = 0; ?>
 <h2>Here are a few of our recent posts:</h2>

<?php while (have_posts()) : the_post(); ?>
    <?php $count++; ?>
    <!-- increase post count by 1-->
    <h3><a href="<?php the_permalink() ?>">Title: <?php the_title(); ?></a></h3>
    <p>Date: <?php echo date("l, F d, Y"); ?> 

		<?php the_content(); ?> 

	<?php endwhile; ?>
	<h4><?php previous_post_link('%link', 'Older Blog Posts', TRUE); ?> ||
	<?php next_post_link('%link', 'Newer Blog Posts', TRUE); ?></h4>

<?php else : ?>
	 <p>There are no posts to display</p>
<?php endif; ?>