If I use as you suggested it would still show only one post on the following page, still doesn’t solve the problem.
I haven’t set the number of posts displayed from the wp admin, I’ve done it via the following code:
<?php $paged = (get_query_var('paged')) ? get_query_var('paged') : 1; query_posts('posts_per_page=1&paged=' . $paged); if (have_posts()) : ?>
<?php while (have_posts()) : the_post(); ?>