Image styles to make all user inserted images appear as circles
To create the image style you want, you'll need to install the ImageCache Actions module to get the "Rounded Corners" effect.  Note that when you install this module, you need to turn on several different modules in drupal (and I'm not sure which one provides "Rounded Corners"):  image_styles_admin, imagecache_canvasactions, image_effects_text, imagecache_customactions, imagecache_coloractions, imagecache_autorotate, imagecache_actions.

Once you have the Rounded Corners effect, you should be able to create the behavior you are looking for.  Here's an example:



The only thing that you can't see on the screenshot is the "radius" setting for the rounded corners effect.   To get a truly round image, it should be set to half of the height/width used in the scale &amp; crop step.  In the example, scale &amp; crop is set to 100x100 and radius is set to 50.  If you set scale &amp; crop to 500x500, you'd set radius to 250.

Once you've got the image style you want, go to Administration > Structure > Content Types, and choose the content type that has the image field.  Go to the "Manage Display" tab, and click on the settings icon for the image field.  This will allow you to select the image style to be used for this image field.

You may need to do this for multiple display modes for your content type, for example "Default" and "Teaser."