The circular vibrato is one of these things that looks cooler than it actually is. What it is, is a combination of the violin vibrato and the regular doorknob vibrato. You should try to move your finger in an elliptical movement along the string, creating a pitch that goes both above and below starting pitch. Used regularly by Vai (but I recon more for show that practicality, since it's quite flashy live). Also what it DOES affect (in my experience) is the ability to control feedback, such as Vai and Satriani often does live.
