A cnc can cut just about anything that you can model in CAD.
Yes it can cut a circle. Take a look at the Solsylva site mentioed above. It has several examples of work done on that style DIY CNC. The quality of work looks quite impressive for an affordable DIY. If you are working in hard metals, then simple wood and pipe cnc will not be enough. If you are a simple hobbiest, though, it might be "good enough".
I for one have been leaning towards the Solsylva machine as my first build. The crankorgan site has some nice affordable machines, but I want it big enough to build its replacement. CNC is a lot like reefkeeping, it is self duplicating.
Dale