I have been working on this too and I found the following solution. It's still not perfect, because I had to make a very large Canvas to prevent the edge of the circle from becoming blurry.
private void addCircleToMap() {
// circle settings
int radiusM = // your radius in meters
double latitude = // your center latitude
double longitude = // your center longitude
LatLng latLng = new LatLng(latitude,longitude);
// draw circle
int d = 500; // diameter
Bitmap bm = Bitmap.createBitmap(d, d, Config.ARGB_8888);
Canvas c = new Canvas(bm);
Paint p = new Paint();
p.setColor(getResources().getColor(R.color.green));
c.drawCircle(d/2, d/2, d/2, p);
// generate BitmapDescriptor from circle Bitmap
BitmapDescriptor bmD = BitmapDescriptorFactory.fromBitmap(bm);
// mapView is the GoogleMap
mapView.addGroundOverlay(new GroundOverlayOptions().
image(bmD).
position(latLng,radiusM*2,radiusM*2).
transparency(0.4f));
}
-- EDIT --
Google updated the API. You can now easily add a circle to your map:
https://developers.google.com/maps/documentation/android/shapes?hl=nl#circles