This makes complete sense. Apple's design aesthetic has shifted sharply to circle-based rather than square-based over the last two years.
Contacts now have circle icons, almost all of the default iOS icons contain strong circles, even the newest Mac icons have circles. Heck, the new Mac Pro is a giant rounded circle!
This is all from a company that made the iPhone 4 more square than it's prior model, and the iMac line rigid rectangles. UNTIL recently, when "round" entered Apple's design language.
I know that circular-based design is the mantra of recent design (i.e. the recent Twitter, Spotify, etc icons) but Apple has clearly shifted away from skeuomorphism and into flat, round designs. Which is a good thing. They need to distance themselves from the competition, both internally and externally in order to survive.
A round iWatch would be a welcome alternate to the square-based Fitbit, Galaxy Gear, and Pebble.