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It would largely depend on how gracefully you degrade your service to those other 200 users. Take any game server with the concept of queues. They could (depending on the game, I know this isn't universal) take in more players than they allow at a time, but the quality would drop significantly. Instead, they give you a number, and say "You are number X in line. Please wait". While it isn't great, and is very frustrating for players, it is a decent solution.

On the other hand, you have Monopoly Street View, which launched with a massively higher number of players than they expected. The end result was a game that was playable for a very, very small group of people, and no one else even knew what was going on.

In general, you need to be able to balance the two. There should be a point where you have an absolute cutoff, no more users/requests beyond that, but you should also have a sliding scale. Of course a server only processing one request at a time will be faster, but you need to be able to degrade somewhat, while still providing good service.