You directly cannot pass the name or slug for excluding a particular category. You have to use the id.
Modifying your code:
<?php
$category_id = get_cat_ID('featured');
//if get_query_var('paged') doesn't work, then try using get_query_var('page') in the next line.
$paged = (get_query_var('paged'))?get_query_var('paged'):1;
$q = array();
$q['category__not_in'] = array($category_id);
$q['paged'] = $paged;
query_posts($q);
if (have_posts()) : while (have_posts()) : the_post();
the_content();
endwhile;
endif;
?>
Hope this helps!
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