The current limit is 1080. After you put that many people in your circle you get that message. I have heard that some people get that message every now and then before they hit their limits. Just wait a day and try again if you are below your limit. There is no limit to how many circles you can be in.
Go to the page of the person you wish to remove and hover over the words "In Your Circle" an "X" should appear. Click the "X" and tell it yes, you do want to remove them.
I sometimes get that message, and I'm below 1080, way below still. I just click the back button on my computer, add the circle again, and it takes! Hope this helps! It's a quick option!