I’m not sure you are understanding what a ‘category page’ is doing; for example your news page:
http://papermepress.com/?cat=1
this is pulling out all post with the categoy ‘news’ which has cat id equal to 1.
depending on your needs there are two possible things you can do.
1 – if you simply want all posts with N categories displayed without any other customisations, you need to create a menu entry link which calls both of your categories i.e. which you can test in the browser:
http://papermepress.com/?cat=1,7
2 – if you want something more complicated you will need to create a specific page and modify the loop; these might give you an idea:
multiple categories
http://devilsworkshop.org/display-posts-multiple-categories-wordpress-page/
multiple cat with selection control
https://stackoverflow.com/questions/8356199/display-multiple-category-posts-on-a-page-in-wordpress
hope it helps
lorenzo