Circles aren't private groups, though. They're asymmetric. I don't have to know what circles other people have put me in. My circles are for me, not for the people I've added to them. I get Garry's point, but I think he is also overthinking how they should be used, and missing the point that circles are mainly about sharing. I can't share tweets with just the people on a certain list, or a combination of lists and specific people.
I agree there's a lot of potential value in the signals from public list-type structures; I even built a small app around that idea applied to Twitter lists: http://www.sabe.us . For what they are intended to be though, as far as I can tell, it makes sense to keep circles as simple as possible. Google has done a good job of reducing the friction to organizing people and then using that organization for granular sharing.
I do also strongly agree that G+ could use some sort of grouping functionality so people can organize around common interests, among other features. But I think this should be distinct from circles…maybe as "channels" or something.