The pager on the media browser's library tab does not actually advance the user through the view. I noticed the problem on 2.0-unstable7 and so updated to the latest 2.0-dev and had the same effect.
All other pagers on views around the site work. Already tried changing the ID on the pager to see if that would have any impact. It looks like the links in the pager do not include any references to the pages.