So you have a well categorized website that has thousands of products and there are some categories or subcategories which paginate. I want to take a look at a possible cost of pagination compared to what I feel is a better option.
The first thing to take a look at is products per page by asking yourself, “have I maxed out each page with 50-75 products?” (this number can increase based on your page rank on those pages). If you have maxed our each page and you still have a paginated category it might make sense to try and capture some additional traffic by eliminating the pagination and adding more categories. Lets take a look at this idea with a basic example below.
Lets say you have a website dogs.com and a category that have over 200 dog collars and the products associated with dog collars. You could paginate that page, but what value will you get from optimizing for “Dog Collars Page 2″ or “Dog Collars Page 3″. What I would suggest is doing the following.
1. Head over to the Google Keyword Tool 
2. Put in “Dog Collars”.
3. What you will find are keywords related to “dog collars” which have traffic associated with them. This is the traffic keyword traffic your missing out on by paginating. Ideally you might want to put your general “dog collars” into the primary category but then remove the “leather dog collars” or “dog training collars” from that primary dog collars category and put them in their own category. This will allow you to optimize for those keywords and capture some of the traffic that those keywords produce.
I would caution you not to create categories just to create them, make sure they are both user and SEO focused. Remember the more categories you create the less link juice each will get (according to the original page rank paper), so you need to keep a balance between SEO, user experience and your highest converting products. I would also add that these new categories should be “link worthy” containing unique content and providing value to the visitor. I probably should give a disclaimer that this is not an overnight quick fix. It will take some time for the link juice to start flowing into those categories and for them to mature and find their spot in the search results.
If you would like help doing this please let us know and we would be glad to help.