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I'm assuming you mean circle tool? Choose the ellipse tool (you may have to click and hold on the rectangle to get the options to pop up), then hold down shift while using it, and that will constrain the ellipse so that it's circular. You can also hold down option, which makes it so the ellipse/circle draws from the center outward instead of the corner.
 
jayeskreezy, I *think* what you're looking for is the Smooth Tool, which is located under the pencil. First select the object you want to smooth, and then trace around the edge of the object using the Smooth Tool. This will get rid of some extra points and fix some of the jaggies.
 
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