Query Posts and Pagnation

I am having trouble grasping pagnation. I’ve gotten my blog to limit the posts but it isn’t automatically moving into pages, just limiting the number of posts viewed. I feel like my theme is missing code.

query_posts(“cat=$category&showposts=3&post_per_page=3”);

^ I would figure “posts_per_page” would automatically throw it into pages but apparently not. I like how some blogs have links to view older posts and goes to a singe page (im assuming page.php) filled with older posts and a link at the bottom of that page to view even older posts.

Anybody have any tips for me? Code Snippets? Anything?