I think people exist in circles, but they don't necessarily talk or share in circles. If Google, or anyone, wants to mimic real social interaction, they need to find a way to enable talking to the right people for that moment and that content. Even the closest circles don't work in daily life. Rarely do I think "I'd like to go skiing with 'best friends' or 'school friends'". I'm much more likely to think of who skis, who hasn't just had a kid, who hasn't just lost her job, who has a job that allows vacation, etc. Maybe I make a circle for just that, but it seems a) difficult and b) overkill. The outreach and sharing only to that circle just isn't the hard part of the communication. Seems like all that solves is "I can't find that email thread about the ski trip in my inbox".
I'd love replies to this line of thought b/c it actually was a bit of a look in the mirror on some stuff I'm working on.