Circe represents two distinct but related threats to Odysseus and his men. The men she turns into animals, which is on the plot level a threat that they'll not be able to finish the voyage because they've given into their baser (animal) instincts. Odysseus she attempts to hold their through seduction. This too would keep him from completing his voyage, and would be a related danger. He would have given into the lure of the woman at hand, rather than staying true to his wife at home.
Circe initially turn Odysseus' men into wild beasts; the danger to them was that they would live out their lives and eventually die in animal form. Odysseus himself was give the herb "moly" to protect him from such a transformation by Hermes. The god also warned him that he needed to make Circe swear various oaths before sleeping with her to protect himself from her magical powers; this would be a second danger. A third danger was that Circe's sexual appeal might cause Odysseus to stay permanently on the island rather than reaching Ithaca.
There are several ways one can read this symbolically. One of the most astute is actually a poem by Thom Gunn, "Moly," which is written from the first person point of view of one of the sailors turned into a pig. It describes the herb moly as enabling the sailor to "rise to skin/ And human title, putting pig within." What this suggests is that Circe's magic does not so much transform people into pigs but reveals our inner natures as being filled with greed, gluttony, and sloth. While Odysseus, with the help of the gods, manages eventually to fight off temptation in three stages (avoiding transformation into a pig, forcing Circe to swear the oath, and deciding to leave the island), most people lack his inner strength and are easily tempted to devote themselves to sensual pleasures and avoid hard work.
Another symbolic level on which one can read the Circe episode is one of sexual temptation. Although Penelope is Odysseus' eventual goal, he spends many years of his journey having affairs with other women. This suggests that women in Homer symbolize both the ideal integrity of the household (as modeled by Penelope) and a life of sensuality, dissipation, and luxury (Circe, Calypso).
I think the author used the character of Circe to impart to the readers one of the obstacles that might come a man's way in reaching his goal. Circe may represent "lust". According to the book, Circe was the most beautiful yet most dangerous witch in her time. She used it to seduce men but she would turn them into swines. Fortunately, Odysseus had overcome her plan because of the help of some gods. Lust deceive men in that same way. It would let men fall into its arms but then later, it would let them feel the very consequences of it.