Page navigation doesnt work

Hi,

I customized my loop little bit but now, next and previous page links doesnt move. I see Navigaton links under of my posts but when I click them, address bar changed as http:………/?paged=2 but I can get the second page articles, it stays on the same page. I uploaded theme here

Here is the loop that I used

<?php if (have_posts()) : ?>
<?php query_posts("showposts=5"); // show latest 5 posts only ?>
<?php while (have_posts()) : the_post(); ?>

<div class="section" id="section<? echo $i++ ?>">
<h2><a href="<?php the_permalink() ?>" rel="bookmark"><?php the_title(); ?></a></h2>
<?php the_content(__('')); ?>
</div>

<?php endwhile; ?>

<?php query_posts("showposts=3&amp;offset=5"); // show 3 posts excluding the latest 5 ?>
<?php while (have_posts()) : the_post(); ?>
<div class="entry">
<h2><a href="<?php the_permalink() ?>" rel="bookmark"><?php the_title(); ?></a></h2>
<?php the_excerpt(__('')); ?>
</div>

<?php endwhile; else : ?>
<?php endif; ?>

Next and previous page link template tags