I'll take a stab at a less scientific or mathematical approach to the problem.
You can think of water molecules as wanting to make the surface of the water as flat as possible. Seeing as any body of water will eventually become still (flat surface) if no outside forces work on it, it makes sense intuitively.
Of course water molecules can only feel the forces caused by nearby water molecules. So all they are really trying is making their local bit of water flat, which eventually flattens the entire surface of the body of water.
A last thing to keep in mind is that it will take a while for a molecule to change direction. If its neighbours are pulling it up, it can gain quite a bit of speed. When one of its neighbours then starts going down again, it will take a while before this molecule has lost its momentum. (the two neighbouring molecules may very well stop being neighbours since their speed will differ too much.)
So what does this mean for waves?
Well, let's imagine you pull one molecule up a bit. This molecule will consequently pull up its neighbours, which will in turn pull up their neighbours etc. However, these neighbours are also pulling the initial molecule down (and so is gravity) so while the neighbours gain upwards speed, this initial molecule gains downward speed, until it actually drops lower than its neighbours (which are still going up). At this point the initial molecule starts slowing down since its neighbours are now pulling it up. This process repeats, with the initial molecule alternatingly being lower and higher than its direct neighbours. Since these neighbours also influence their neighbours and so on, this creates a wave. Since there are statisticly just as many neighbours in any direction (and water molecules are extremely small) this spreads out at almost exactly the same speed in each direction, this makes a circle.
Now let's consider what a straight wave looks like. 104
You have a long (or infinite) line of molecules that are at a maximum height and their neighbours are lower the further away they are from the intial row of molecules. Until we get far enough away, at wich point the pattern repeats itself. This shape also seems to move in a direction perpendicular to the line. If we assume molecules only move up and down, this can only mean the particles that are to the right of the wave (if the wave is moving right) are moving up and the particles to the left of the wave are moving down. You can easily see how this would result in each molecule moving up and down periodically, which would result in exactly the way waves behave. Since the wave is straight, the neighbours in the direction parallel to the wave must be at the same height and have the same speed as one another. So the wave can only propagate in a direction perpendicular to the wave.
So what happens when the wave hits the wall?
When the wave hits a wall, molecules don't have any neighbours to be pulled up or down by in that direction. This allows them to move a bit more freely, which results in the wave seeming to bounce back (I won't get in to this much further)
At the hole in the wall though, the molecules inside the hole will logicaly start moving up and down. In turn their neighbours will do the same. The neighbours in the direction parallel to the waves won't be at the same height as them though. (since the wave can't get through a solid wall.) So this situation ends up looking a lot like example with the one intially moving molecule, which resulted in circular waves. And that's exactly what will happen.
note:
I simplified the matter enormously, but I believes it sketches a more or less accurate idea of how simple waves work. 104