Imagine how much more you could get on the 360 if it wasn't round.
How many times do we have to do this dance?
Again, it depends on what you're displaying. Quite a few of Apple's own Watch apps use circular items which would fit better on a circular display.
Also imagine things like radar displays, or a map of search points around you. A circle is much better for those.
Yes, rectangles are marginally better for lots of text, but a wrist device is only supposed to be for quick notifications anyway. If people actually only cared about seeing more text, then they'd be buying screens like this:
Guess why they don't? I think it's because style is more important to most people.
Finally, the nail in the coffin of the silliness in this whole discussion, is the fact that people ALREADY CHOOSE A SMALLER TEXT DISPLAY when they buy the smaller Apple Watch model.
Again, this is because people are far more interested in how a watch looks on THEIR wrist, than by how much text they see without scrolling.
In real life, the shape doesn't matter as far as usefulness. Either shape works fine. It's all more more about a style choice. If/when Apple comes out with round, we'll see how much better it sells. It's all just like with the larger phone display debates. Some people hated on those until Apple started selling them. You'd think they'd learn from history.