Pagination Issues

[eluser]happydude[/eluser]
I have been trying to solve a pagination issue for a long time now to no avail.

Here is a sample URL: http://furogiftshop.com/categories/cookware/1

The pagination links are located just above the products. When you click on any other page number, the first page number (1) is always set as the current page number.

Any help will be appreciated.

My controller code: http://pastebin.com/gqzYFMRz
My view code: http://pastebin.com/iQFgJ9Fy