Pagination in author, category, archive and tags pages does not work

This looks like a simular issue to this one with wp-pageNavi: http://scribu.net/wordpress/wp-pagenavi/right-way-to-use-query_posts.html.

Taxonomies and archives should use ‘page’, not ‘paged’ so use that in the urls to begin with.

Then, to ensure your pagination script works in all locations you can change the way you get your $paged variable.

Something like this should do it:

if (is_archive()) {
     $paged = (get_query_var('paged')) ? get_query_var('paged') : 1;
} else {
     $paged = (get_query_var('page')) ? get_query_var('page') : 1;
}