You should rel=canonical only in cases you have duplicate content, which may be case when
1. You want to have both pages available
2. You have similar content due to some choices at your page- you have pages for 10 items and 20 items per page while this list has only 5 items in it so both pages showing same content.
3. You need to control the level of parameters you want search engines to take care of. For e.g. you have 3 parameters state, city, street but as taking all three together will give you a lot of data so you may be just going upto city even when street was there in URL.
Also you should use re=prev and rel=next for URLs with pagination.
You can read more about it at http://googlewebmastercentral.blogspot.in/2011/09/pagination-with-relnext-and-relprev.html