I use a hole saw. It's a drill bit which is actually 2 bits in one. It has an inner "starter" bit and an outer bit that looks like a saw blade except it's in a circle. The starter bit extends farther than the saw so you can line up your drill and get it started (obviously). Then, the hole saw kicks in and cuts a perfect circle. The nice part about hole saws is that you only have to buy one started bit and the outer saws are interchangeable. This makes it cheaper.