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Transmit diversity through multiple transmit antennas is generally regarded as beneficial to the link level performance. In this paper, we investigate the role of transmit diversity with respect to the link level and the system level performance. We focus on the reverse link analysis where mobile users are assumed to have independent fading and they are equipped with multiple transmit antennas (nT). Each mobile station is assumed to have an average power constraint. The base station is assumed to have nR receive antennas. We shall consider scalar power feedback in this paper. Based on the information theoretical analytical model, it is shown that. transmit diversity can enhance link level performance but is harmful to the multiuser system performance when there is insufficient feedback information.