If I changed my "umask", so that group members had all permissions.
What would be the effect when creating new files and directories?
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The effect depends on the application.
When an application creates a file it specifies the maximum amount of permissions that should be granted. The umask says which of those permissions should be actually granted.
So if you have a umask of 0770 saying that group members should not have any permissions restricted and the application says that the file should have 0600 (so r/w to owner and no group or other permissions) then the file ends up 0600. If the application said it should be 0666 (r/w to owner, group and other) then the file ends up 0660.