index.php not parsing

My entire theme is working fine except for index.php

My front page uses a different template, as does page 1 of the blog section, but page 2 and back uses index.php. When I go to /page/2/ it just prints the php, when I view the source it shows:

<?php get_header(); ?>

		<div class="entry">

		<h2>Blog</h2>

			<div class="three-one">

				<div class="one-two-three">

					<?php query_posts('paged=1'); ?>

					<?php if (have_posts()) : ?>

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

							<div class="post" id="post-<?php the_ID(); ?>">

								<small><?php the_time('F jS, Y') ?> <!-- by <?php the_author() ?> --></small>

								<h3><a href="<?php the_permalink() ?>" rel="bookmark" title="Permanent Link to <?php the_title_attribute(); ?>"><?php the_title(); ?></a></h3>

								<div class="entry">
									<?php the_content('Read the rest of this entry &raquo;'); ?>
								</div>

								<p class="postmetadata">Posted in <?php the_category(', ') ?> | <?php edit_post_link('Edit', '', ' | '); ?>  <?php comments_popup_link('No Comments »', '1 Comment »', '% Comments »'); ?></p>
							</div>

						<?php endwhile; ?>

						<div class="navigation">
							<div class="alignleft"><a href="/page/2/">&laquo; Older Entries</a></div>
						</div>

					<?php endif; ?>	

				</div>

				<div class="four">

					<?php get_sidebar(); ?>

				</div>

				<div class="clear"></div>

			</div>

		</div>

<?php get_footer(); ?>

I’ve tried cutting index.php down to just:

<?php get_header(); ?>

And even that didn’t work. When I view the source, it just shows exactly that, “<?php get_header(); ?>” so I know it’s not the contents of the template I’m using.

Any ideas?
Thanks!