There is no radius search capability in GeoPlanet. We think the neighbor functionality provides better results than a radius search. A radius search can only find places whose centers are within the circle defined by the query point and radius. The neighbor resource returns all places that are adjacent or nearby to a given place. It doesn't matter if the place is small or large.
If you think you have a use case where a radius search is required, please create a topic in the GeoPlanet Enhancement Request Forum.