Pagination w/Static Front Page

I’m trying to add pagination to my frontpage.

It’s currently set to Settings –> Reading –> Static Page –> Frontpage: home

I’m using a custom template for the homepage.

I have my template-home.php open and it looks like this:

<?php
/*
Template Name: Home
*/
?>

<?php get_header(); ?>

    <div id="middle">

        <div class="container content-background">


            <!---------------------------------------------------------------------------------------------*/
            /*--------------------------------------------------------------------------------------------->

            <?php// wp_reset_query(); ?>


            <?php 
            if ( get_query_var('paged') ) { $paged = get_query_var('paged'); }
            elseif ( get_query_var('page') ) { $paged = get_query_var('page'); }
            else { $paged = 1; }

            query_posts('posts_per_page=3&paged=' . $paged); 
            ?>
            <!---------------------------------------------------------------------------------------------*/
            /*--------------------------------------------------------------------------------------------->


            <?php if (have_posts()) : while (have_posts()) : the_post(); ?>

               <!--BEGIN #main-content -->
            <section class="main-content top-margin eleven columns"> 

                  <?php /* Widgetised Area */ if ( !function_exists( 'dynamic_sidebar' ) || !dynamic_sidebar( 'Homepage Main' ) ); ?>
                  <div style="clear:both">
                      <?php the_content(); ?>
                  </div>
                  <!--BEGIN .navigation-->

            </section>

            <aside class="sidebar top-margin five columns">
            <?php /* Widgetised Area */ if ( !function_exists( 'dynamic_sidebar' ) || !dynamic_sidebar( 'Homepage Sidebar' ) ); ?>
            </aside>

        <?php endwhile; ?>



            <!---------------------------------------------------------------------------------------------*/
            /*--------------------------------------------------------------------------------------------->
            <div class="navigation">

                <div class="nav-old"><?php next_posts_link(__('&larr; Older Entries', 'framework')) ?></div>
                <div class="nav-new"><?php previous_posts_link(__('Newer Entries &rarr;', 'framework')) ?></div>

            <!--END .navigation-->
            </div>
            <!---------------------------------------------------------------------------------------------*/
            /*--------------------------------------------------------------------------------------------->


            <?php echo paginate_links(); ?>
        <?php endif; ?>            

        <!--END .container-->        
        </div>
    <!--END #middle-->
    </div>

</div>

<?php get_footer(); ?>

I read the “static front page” section of this page an it’s not working for me.

When I run the template it duplicates all my posts, show 6 posts and duplicates my header section. however my Settings –> Reading –> Says 5