Circular needles can be used to knit things in the round, yes, such as a cap or a sweater, for instance, that will need no or just a little bit of seam work to complete. Circular needles are also used for items that require you to cast on a lot of stitches and/or will get heavy as you continue working them, such as a large man's sweater or an afghan.
A lot of people, however, have taken to using circular needles for everything, because there's no reason why one can't knit back and forth on them. Lots of people also swear by Magic Loop, which uses one rather long-cabled circular needle to make small tubular objects. Another popular use of circular needles is to use 2 sets of the same size to make 2 socks (the whole pair) at the same time.
Many people who do use their circulars for almost everything have interchangeable circular needles from Knitpicks, Denise, or another manufacturer. With these, you get various cables to attach to needle tips, so that you have many sizes of needles and lengths of cables for one relatively low price. It's generally a lot cheaper than collecting 10" and 14" straights plus a bunch of circular needles for those things that require them, and perhaps a collection of double-pointed needles for those small-diameter tubes.
Hope that helps. Personally, when I started knitting last year, I spent a bunch of money on so-called "cheap" straight needles (Boye, Susan Bates, etc.), but finally invested in Knitpicks harmony options and gave all my straight needles away! (I still like dpns, so far, but will be giving the magic loop and 2-circular needles method for socks a try soon!)