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I was wondering if it is better to put the pistols and grenades on before the arms as I seem to have no space after.

Not a simple answer.
Are we talking basic marines or guardsmen? Try it out first with one model and decide. For my guard, I left the pistols off (the bits seemed oversized to me) and used the grenades to fill cracks etc where I could fit them. Pretty much same with the marines.
Or...
You can leave them off.
Most players let pistols and grenades slide if they are not the models primary weapons. Even tournaments rarely demand grenades be modeled. Is your purpose to play absolutely What You See is What You Get or are you a modeler who thinks they look great and are really into the painting? Then you'll need to fit them, usually before you place the arms on. Many painters who go for high quality paint models before arms are on as it is.

It depends on how you have the arms,
Are these space marines or imperial guard?

Sorry forgot to state that they were space marines, I didn't know how strict people were when it came to the What you see is what you have idea. I have a mixed bag at the moment some of the guys have the bolter across the body and others have a bolter with a chainsword.

Space Marines automatically have a combat blade and bolt pistol/ grenades, they dont have to be visible.

If their arms are higher than their waists then by all means show pouches, holsters, grenades and blades

Arms first, as the primary weapon is what is most importantly as a visual marker. Secondary items are not necessary to be present visually (particularly grenades/pistols, etc.). Pistol holsters, pouches and grenades can very easily get in the way of Space Marine arms...so I'd definitely do the arms first.