In this paper the capacity and coverage of a cellular network is analyzed in the perspective of Grade of Service (GoS) constraint. The cellular networks considered, unlike GSM systems, allocate variable radio resource sizes to users even for constant bit-rate (CBR) traffic. The Grade of Service is the call blocking probability. It is shown that the blocking probability ($P_{b}$) varies with user distance from the Base Station (BS). It is also shown that the effective cell-radius varies for different services (bit-rates) given a certain GoS. Furthermore the variation of useful area of a cell along with offered load is shown for different services. If maximizing energy efficiency is one of the considerations in deploying a cellular network, then it is shown that the optimum transmit power for a cell layout is different when GoS is used as the criterion as compared to minimum throughput or minimum Signal to Interference plus Noise Ratio (SINR) at cell edge.