circular always! remember too that you can use circulars for flat knitting as well as knitting in the round. i have never used straight needles...never even bought a pair. i think the interchangables are a great investment because you are less likely to need to buy extra needles along the way. though there is always the issue of having two projects with the same needles going at the same time!
do you have any circs now? a good project will depend on what size circs you have. 16 inch would be good for hats. 32 inch would be good for afghans.