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In this work the modeling and capacity of a dual polarized (DP) MIMO channel is addressed. The modeling includes channel parameters such as receive and transmit correlation, channel cross-polarization discrimination (XPD), and antenna parameters such as polarization state, polarization parallelity and coupling. The capacity of the DP MIMO channel is evaluated and compared to the capacity of a single polarized (SP) MIMO system. The SP MIMO system with spatially separated antenna sensors has the advantage that it also offers array gain and will therefore during idealized conditions outperform the DP MIMO system. However, in this work it is found that this advantage often is reduced and sometimes even lost when channel and antenna imperfections such as, e.g., correlation, channel XPD, and polarization mismatch are introduced. The main conclusion is that DP antennas might not always yield the best MIMO performance, but instead offer compact antenna solutions for mobile devices and robust performance that is more insensitive to the aforementioned imperfections.