This is because CDMA is basically a cacaphony of stations screaming for attention and as a cell gets busier the furthest stations (phones) won't make it through the noise.
GSM was a lot better at this with its fixed timeslots, however as a result it had much more flexible capacity limits. From 3G onwards all standards are based on CDMA (not just for technical reasons, also because of Qualcomm's lobby who are the ones that own many CDMA patents).
