To launch a cellular network, prelaunch capacity dimensioning is performed which includes coverage estimation and throughput prediction. Cellular companies in developing countries like Pakistan are only providing 2G services, while 3G services are yet to be launched. Although a lot of research has been done on 3G services in developed countries but there is very little knowledge regarding practical aspects of planning and optimization of 3G networks in third world countries like Pakistan. This research paper includes a thorough analysis of factors that affect capacity of 3G networks, including radio propagation models. Various propagation models are studied and propagation constants of Standard Propagation Model are tuned according to topography of Islamabad. The performance analysis of these propagation models is done using Matlab and results are verified through planning tool Atoll and field measurements. Based on analysis of these results capacity dimensioning, in terms of number of sites, is carried out for an urban network of Islamabad.