To delete a paper, go to the submission's Summary page (available when you are viewing either the Review or Editing pages, as a sub-header just below the navigation bar). From there, you can click the link that says "Archive Submission." Once the submission is archived, you can go to your Archives page (from the Editor's User Home, click the Archives link); find the submission in question; and click the Delete link next to it.
I would recommend you take a look at OJS in an Hour, and also the rest of our documents, at http://pkp.sfu.ca/ojs_documentation
. We also have some video tutorials at http://pkp.sfu.ca/tutorials
. We are in the midst of expanding our documentation, so any advice on what to cover is appreciated.