Sure, circles will get plenty of usage in the Bay Area, where the people who built it probably felt if only they could build this one extra feature then people would come flocking to them away from Facebook. But this misses the point.
Nobody on Facebook, other than techno-geeks, have been clamoring for this. Are you the type of person who would consider deleting your Facebook account? You're probably also the type of person that will be interested in Circles. But, you also are the type of person that, unlike 99.99% of the rest of the population, can comprehend having a social life without Facebook being the glue.
Facebook is cool. Facebook gets people laid and lets you participate in more debauchery online once you have stumbled home drunk from the bar. It doesn't feel like a hospital room or a bathroom, it feels like a party.
If Google wants a chance to usurp Facebook's dominance, it needs to do so under a different brand. Repeat after me: the Google brand will never be as cool as Facebook.
More importantly though, it needs to figure out what Facebook is missing. No, Circles are not what Facebook is missing. There's certainly something that Facebook is missing, that the cool kids would want, but odds are whatever it is wouldn't pass the smell test of the type of things Google would consider building.
Imagine you are at a party. It's fun, the music is good, there is booze, and the people are good looking. What's missing? Google's response would be: "The music is hard to hear, we should upgrade the speakers." Facebook's response would be: "cocaine."
The reason Facebook has come up to where they are, after all, stems from the big brass balls they've had for pushing up against the standards of privacy and even decency held by society today, something Google has never and will never be able to (or should want to) do in return. This is why Google will keep fumbling around trying to "out-innovate" Facebook, and will fail again and again in spectacular ways. It's sad, but endearing.
"Cool" is the last thing that comes to my mind when I think of Facebook.
I do agree that it'll be tough to get luddites to jump ship -- but I see that as an overwhelmingly positive thing.
Personally, I hope you're right and the coked-up party bros stay on facebook. Because I'm interested in using technology for reasons other than simply facilitating my offline social life.
But it seems unlikely. Imagine transposing your argument onto Facebook and Myspace just a few years ago.
Anyone who thinks the average person is going to start using Google+ instead of Facebook is delusional at best.
Just listen to those Google+ introductory videos. Who the hell talks like that? Friends being worth your time -- what? "Adding people to your life"? Are these people real?
Here's the real deal: Google+ is sterile and lacks originality -- it's just Buzz and GTalk with a new uninspired interface.
Being able to group people in circles with JS animation is only exciting to geeks. No one else gets off on contact/group management.
Circles is one of the features that will get me away from FB.
And i dont really care about the "cool kidz"
edit: what i forgot we will get away from the auto opt-in google will never do this again since the buzz-fail. Because everytime FB rolls out a new shiny feature i have to look around how to disable it like "auto tagging" ...
Huddle is cool too, but requiring everyone to have an Android phone (and later iPhone) is probably a dealbreaker for most groups.
Young kids will want a way to do private groups as both 1) they get older 2) their parents and other adults hop on facebook--since it's not socially acceptable to say no to your mom on fb. And if google nailed that, I think they have a good shot, as what teenagers, rap artists, and technorati do now is what everyone will be doing in the future.
That said, facebook is a fast follower. Their response to how private groups and sharing could be enough to stave off google.
Article gives a good overview of the type of corner both Facebook and Google don't want to be in.