No, I don't think the city was a "Grand" as it could have been, but we all have to realize something here. The city is constructed on a small island and is entirely based around White Gold Tower. They could only go so far with the size, shape, etc. of the city. Personally I think they did very well with the overall design, it just needs tweaked. Also, like all other cities in TES they did very well in giving all the NPCs in the city an actual life and schedule, giving them places to live, and making sure they were all fit into the city in a way that made the player kinda comfortable walking around the streets. It does however feel a little cluttered at times, though, but that's how many cities feel in real life.The architecture was nice but could have included more detail. Personally I love the Elven Gardens and sunset with the orange reflecting on the stone. That's the "grandest" part of the Imperial City. The Market District is my preferred place for trade as well because of the selection. The Arboretum was a great idea, as it displayed much of the plant life and stone work that the developers put so much detail into. The Temple District is great for it's layout and it's incredible after beating the storyline. Green Emperor's Way is a little gloomy at times because it is used largely as a burial ground but sunsets and sunrises against White Gold Tower are spectacular. The Riverfront is nice but it seems like there would be more people there, it is the capital after all. The Arcane University is nice, especially the Orrery and the enchanting and spellmaking altars if you dont have Frostcrag Spire. The bridge leading into the Imperial City is actually quite beatiful if you think about it as well.
With some thought, you realize that the Imperial City isn't exactly a paradise or anything, but for a game made in 2006, and for a game that has so many other beautiful locations and views, the Imperial City is actually very Grand.