Circle hooks....ah, a popular subject on this forum, but its nice to see the word is getting out and they are being used more often....
They work well, and are designed mainly for bait...there are a bunch of different designs, but all work in the same manner. When steady pressure is applied to the hook (as in side pressure) the hook rotates and usually---i say usually---hooks the fish in the sides of the mouth. I have used them for cats with bait and also with live shrimp and greenbacks for snook. i like them a lot, you gut hook fewer fish and its much easier to remove the hook after you land the fish.
Just like ePiC said, it takes awhile to get used to them...its hard to overcome the instinct of impulsively setting the hook when you notice a fish on. instead pick up your rod, reel in the slack, and apply the side pressure i mentioned earlier. any aggressive hook strikes will usually jerk the hook out of the fish's mouth. with cats they usually end up hooking themselves when they swim off with the bait.
Ive tried tying pike flies on circles, and have had mixed success...they dont work as well with fish that strike aggressively, and when you do get a strike you have to keep stripping until the line is tight and then the hook usually sets itself. traditional hook sets wont work as well with this particular style of hook, it takes some practice. I think ive hooked alot of fish with circles i might have otherwise missed with traditional khale style hooks, just due to the fact you dont have to be so quick with your hook set...
for cats i use a size 2/0 or slightly smaller...those seem to work with the cats you usually find in this region (under 20 lbs)