Pagination with custom loop

If this is the main loop you use to display posts on your page, you should not execute a new loop but modify the existing loop that WordPress will execute anyway. This way you can be sure that all extra query parameters will be taken into account.

Here we want to display posts of type game and limit the number of posts on the page. You can do this with the following code:

add_action( 'pre_get_posts', 'wpse5477_pre_get_posts' );
function wpse5477_pre_get_posts( &$wp_query )
{
    if ( $wp_query->is_category() ) {
        $wp_query->set( 'post_type', 'game' );
        $wp_query->set( 'posts_per_page', 2 );
    }
}