The improvement in terms of channel capacity provided by using a MIMO antenna system in personal area networks is investigated. Two on-body channel models derived in the 2.45 GHz frequency band are also presented and applied to two on-body links. The first proposed model uses, for each spatial subchannel, the same average values for the Rician factor, received power, and shadowing deviation. The second model encompasses the polarization loss in the on-body channels by utilizing different values of these parameters per each spatial subchannel. Furthermore, the joint correlation matrix is used instead of the classical Kronecker product. It is shown that the second model results in a better agreement of the achievable capacity with the measured channel. Also, the equal power and waterfilling power allocation schemes are compared in such on-body channels and it is shown that, adopting waterfilling instead of the equal power provides a higher capacity in the low SNR range while yielding the same achievable capacity in high SNR.