Turn your Settings->Reading Blog and Home page back to default. Front-page.php is pulling your homepage content instead of your posts because you’ve told it to in your settings.
front-page.php could also display the latest posts on your homepage, but if you’ve altered the settings so that a Static Page is your homepage then this file would be used to display that (assuming you haven’t given that page a specific page template file to use).
http://wordpress.org/support/topic/difference-between-homephp-and-front-pagephp