Even before Google+ was revealed, it was clear that whatever Circles would end up being, the'd have something to do with contacts - now that we know all about Circles and how they're made to hold all of our friends, family, and cohorts, we've been wishing for a way to have this done in a little less manual way - that's where Katango, the group Google just acquired, comes in. It was Katango that today announced that they'd been picked up by Google, noting that of course they're excited to join the team and that they'd be working specifically with Google+. Given their work with Facebook and automatic sorting of Friends into categories with which iOS users could then share with, we've got a pretty big clue as to what the team will be doing with the ol' G+.
Circles as they exist today are made up of the contacts you've got on Google+ that you want to share certain content with specifically. What we must assume that the Katango group will be doing is giving users the option of sorting people into Circles automatically in any number of given ways. One example is Google Employees - I've got a circle of just people who note that they work for Google in one circle. Certainly this could be one category that could be easily picked up by Katango for an auto-Circle.
Then there's the fact that Katango has also specifically noted that they'd be making Circles smarter. Given that Circles are essentially at the heart of Google's social network Google+, Katango has a lot to live up to and more than likely a few swords hanging over their head. That said, last I checked, noone in the history of the world has ever complained about working for or at Google, so good times are on the way!