Solution 1:

Google made is simple in maps v2. The snippet below demonstrates both drawing markers and circles along with updating their positions together.

private Circle mCircle;
private Marker mMarker;
private GoogleMap mGoogleMap;

@Override
protected void onCreate(Bundle savedInstanceState) {
    super.onCreate(savedInstanceState);
    setContentView(R.layout.activity_main);

    mGoogleMap = ((MapFragment) getFragmentManager().findFragmentById(R.id.mapFragment)).getMap();
    mGoogleMap.setMyLocationEnabled(true);
    mGoogleMap.setOnMyLocationChangeListener(new GoogleMap.OnMyLocationChangeListener() {
        @Override
        public void onMyLocationChange(Location location) {
            LatLng latLng = new LatLng(location.getLatitude(), location.getLongitude());
            if(mCircle == null || mMarker == null){
                drawMarkerWithCircle(latLng);
            }else{
                updateMarkerWithCircle(latLng);
            }
        }
    });
}

private void updateMarkerWithCircle(LatLng position) {
    mCircle.setCenter(position);
    mMarker.setPosition(position);
}

private void drawMarkerWithCircle(LatLng position){
    double radiusInMeters = 100.0;
    int strokeColor = 0xffff0000; //red outline
    int shadeColor = 0x44ff0000; //opaque red fill

    CircleOptions circleOptions = new CircleOptions().center(position).radius(radiusInMeters).fillColor(shadeColor).strokeColor(strokeColor).strokeWidth(8);
    mCircle = mGoogleMap.addCircle(circleOptions);

    MarkerOptions markerOptions = new MarkerOptions().position(position);
    mMarker = mGoogleMap.addMarker(markerOptions);
}

Solution 2:

How to draw circle in Google Maps v2 (bitmap)

// 1. some variables:

    private static final double EARTH_RADIUS = 6378100.0;
    private int offset;

// 2. convert meters to pixels between 2 points in current zoom:

    private int convertMetersToPixels(double lat, double lng, double radiusInMeters) {

         double lat1 = radiusInMeters / EARTH_RADIUS;
         double lng1 = radiusInMeters / (EARTH_RADIUS * Math.cos((Math.PI * lat / 180)));

         double lat2 = lat + lat1 * 180 / Math.PI;
         double lng2 = lng + lng1 * 180 / Math.PI; 

         Point p1 = YourActivity.getMap().getProjection().toScreenLocation(new LatLng(lat, lng));
         Point p2 = YourActivity.getMap().getProjection().toScreenLocation(new LatLng(lat2, lng2));

         return Math.abs(p1.x - p2.x);
    }

// 3. bitmap creation:

    private Bitmap getBitmap() {

        // fill color
        Paint paint1 = new Paint(Paint.ANTI_ALIAS_FLAG);
        paint1.setColor(0x110000FF);
        paint1.setStyle(Style.FILL);

        // stroke color
        Paint paint2 = new Paint(Paint.ANTI_ALIAS_FLAG);
        paint2.setColor(0xFF0000FF);
        paint2.setStyle(Style.STROKE);

        // icon
        Bitmap icon = BitmapFactory.decodeResource(YourActivity.getResources(), R.drawable.blue);

        // circle radius - 200 meters
        int radius = offset = convertMetersToPixels(lat, lng, 200);

        // if zoom too small
        if (radius < icon.getWidth() / 2) {

            radius = icon.getWidth() / 2;
        }

        // create empty bitmap 
        Bitmap b = Bitmap.createBitmap(radius * 2, radius * 2, Config.ARGB_8888);
        Canvas c = new Canvas(b);

        // draw blue area if area > icon size
        if (radius != icon.getWidth() / 2) {

            c.drawCircle(radius, radius, radius, paint1);
            c.drawCircle(radius, radius, radius, paint2);
        }

        // draw icon
        c.drawBitmap(icon, radius - icon.getWidth() / 2, radius - icon.getHeight() / 2, new Paint());

        return b;
    }

// 4. calculate image offset:

    private LatLng getCoords(double lat, double lng) {

        LatLng latLng = new LatLng(lat, lng);

        Projection proj = YourActivity.getMap().getProjection();
        Point p = proj.toScreenLocation(latLng);
        p.set(p.x, p.y + offset);

        return proj.fromScreenLocation(p);
    }

// 5. draw:

        MarkerOptions options = new MarkerOptions();
            options.position(getCoords(lat, lng));
            options.icon(BitmapDescriptorFactory.fromBitmap(getBitmap()));

            marker = YourActivity.getMap().addMarker(options);

and result:

google maps v2 draw circle

Solution 3:

Android 2.0 API you can use CircleOption to draw a circle, works really well, no messy conversions of pixels to meters.

public CircleOptions getCircleOptions() {
    CircleOptions co = new CircleOptions();
    co.center(latlng);
    co.radius(getCircleSize());
    co.fillColor(getCircleColor());
    co.strokeColor(getStrokeColor());
    co.strokeWidth(2.0f);
    return co;
}

    Circle circle = mapView.getMap().addCircle(munzeeMarker.getCircleOptions());