i expect you may have solved your problem by now but this post came up when i searched for the same problem.
It was because of the number of posts on my site, In my theme the query was set to showposts=6.
when it got to page 3 there were only 3 posts to show so it was returning a 404 page for some reason.
removing this and setting the number of posts to display as 6 in the reading settings of my site fixed this problem