The ripples are circular because the momentum is transferred to all the molecules of water around the stone, to accomodate the stone (because it moves water apart while falling down) they move outwards, conservation of linear momentum can be applied to this: 
When you throw the stone into the water, its momentum is acting downwards, when it hits the water, it's downward velocity is reduced, because linear momentum is conserved and because the stone also hits the water, the stone disperses its downward vector into several components acting horizontally. Thus the initial downward momentum of the stone and the momentum of the ripples in the water are conserved.