Pagination linking to first page

Perhaps you can take a look at this question and the answers and check if you really want to use query_posts() as it is not recommended while dealing with posts pagination. Why not use pre_get_posts action instead? Or you can try something like this:

<?php

    $custom_query = new WP_Query(array(
        'post_status' => 'publish',
        'post_type' => 'products',
        'connected_type' => 'product_to_category',
        'connected_items' => $post,
        'order' => 'ASC',
        'order_by' => 'menu-order',
        'posts_per_page' => '10',
        'paged' => (get_query_var('paged')) ? get_query_var('paged') : 1
    ));

?>