Don't call notifyPaused from within pauseApp. pauseApp is called by the system to inform your application that it's being paused. You call notifyPaused outside of pauseApp to tell the system that you're putting the application in a paused state. (Note that pauseApp will not be called in this case -- pauseApp is only called when the system is the one initiating the pause.)
When your application is ready to resume, it calls resumeRequest from a background
thread. The system will then (at some undertermined point in the future) unpause the application and call startApp, at which point your app is again active.
See pp.44-47 of "Mobile Information Device Profile for
Java 2 Micro Edition".