Pagination on static home page not working

Hi All,

I know this has been asked too many times so far, and trust me I’ve tried many options but I just can’t get it working.

Pagination per category works fine, per tag, per pages, everywhere except on the home page that is static. Moreover, it is correctly counted and correct number of possible pages is given, but when you click next / number it just ends up on the front page again.

I’m using Lensa theme from colorlabsproject, qTranslate plugin and site is available at:
https://igor.stojakovic.net

Here is my whole page with some tries that are commented out:

<?php
/*
Template Name: Blog
*/
?>
<?php get_header(); ?>
<div class="row">
    <header class="page-heading block-background block-inner">
      <!-- <h3><?php wp_title(''); ?></h3> -->
      <h3><?php _e("<!--:en-->Hi There<!--:--><!--:hr-->Ciao, zdravo, dobar dan :) <!--:-->"); ?></h3>
	  <div class="minimize"></div>
    </header><!-- .page-heading -->

    <div class="main-content block-background column col8">
      <div class="block-inner">
	 <?php
	  //$paged = (get_query_var('paged')) ? get_query_var('paged') : 1;

	  //$args = array(
		//'posts_per_page' => 3,
		//'post_type'=> 'post',
		//'paged' => $paged
		//);

	  //query_posts(array('post_type' => 'post', 'paged'=>$paged));
	  //query_posts( array( 'cat' => -0, 'paged'=> $paged ) ); //prvi pokusaj popravka paginacije
	  // For some reason this always returns "else, and ends up on $paged=1.
	  /*if ( get_query_var('paged') ) {
			$paged = get_query_var('paged');
		} elseif ( get_query_var('page') ) {
			$paged = get_query_var('page');
		} else {
			$paged = 1;
		}*/

	  if ( get_query_var('paged') ) {
			$paged = get_query_var('paged');
		} elseif ( get_query_var('page') ) {
			$paged = get_query_var('page');
		} else {
			$paged = 1;
		}
		query_posts( array( 'post_type' => 'post', 'paged' => $paged ) );

	  if(have_posts()) : while(have_posts()): the_post();
	 ?>
        <article class="entry-post">

          <header class="entry-header">
            <h2 class="entry-title"><a>"><?php the_title(); ?></a></h2>
		    <?php colabs_post_meta(); ?>
          </header>

          <figure class="entry-media">
			<?php
					$single_top = get_post_custom_values("colabs_single_top");
					if (($single_top[0]!='')||($single_top[0]=='none')){
						if ($single_top[0]=='single_video'){
							$embed = colabs_get_embed('colabs_embed',400,231,'single_video',$post->ID);
							if ($embed!=''){
								echo '<div class="single_video">'.$embed.'</div>';
							}
						}elseif($single_top[0]=='single_image'){
							colabs_image('width=620&link=img');
						}
					}else{
						colabs_image('width=620&link=img');
					}
			?>
          </figure><!-- .entry-media -->

          <div class="entry-content">
			<?php colabs_custom_excerpt(); ?>
			<p class="more"><a>"><?php _e("More","colabsthemes"); ?></a></p>
		  </div><!-- .entry-content -->

        </article>

	 <?php
	  endwhile;
	  colabs_pagenav();
	  endif;
	 ?>
      </div><!-- .block-inner -->
    </div><!-- .main-content -->

	<?php get_sidebar(); ?>

  </div>
<?php get_footer(); ?>