Link:
http://picasaweb.google.com/pewaukeedp/FrontYard?authkey=Gv1sRgCIqBqPaVkte5yAE#5465698693943253122

I don't know how much rain you get; where I live I don't think a tree that small would have much effect on perennials growing outside its drip line.

If you'd rather leave the ring as-is, you could put in plants that require less water and tolerate the sun more. Hostas prefer more shade and moisture than it looks like that site provides. Lavender, sedums, gaura, etc. can make do with much less water.

Should I just make 2 separate round circles around the tree and around the light pole and put grass in the middle again? Or what would look better?

I think the bed is a nice shape as it is; if you put separate circles around everything on the property it will look like you have a case of circle-itis, or perimeteritis as we used to call it around here. A disorder that drives you to compulsively make circles of plants around everything, leaving you devoid of other ideas. A shape that is even more independent of the pole and tree might be even better, but given what you have, especially with that cute little elf standing in front of it, I would leave well enough alone.

As for the growing conditions, I too am skeptical that the tree roots, at that size, are really at fault. More likely, or at least an aggravating factor, is that rain is just not getting to the ground under the tree in summer, so watering would be required. Or, you could thin the tree canopy with some pruning which would also help to ensure the tree is developing an attractive basic shape as it grows. What kind of tree is it? Some have more aggressive roots than others.

Growing conditions under trees are actually often tricky (as we've pointed out in your spruces thread), and sometimes beds away from trees is the best option. But trees have to have something under them, and some will outcompete even grass. It's always a balancing act.

The choices for this bed are, as pointed out above, to either change the plants, or water enough to sustain the plants you have. If you are on water restrictions there are ways to use grey water from the house, or you could have a rain barrel.

Hostas are funny plants - they are actually pretty drought tolerant once established, and a lot of them like quite a bit of sun. But most of them can't take both sun and drought.

KarinL

Today we bought 2 groundcovers for the area so we hope they do good. What is good to use to fertilize groundcovers normally? Also, with the color of our home what color mulch would flow well? Our roof is a 3 dimension medium grey/light grey, the siding of our home is a bluish grey....Right now we have dark brown mulch chips all over.....I sort of like the shredded mulch, but I don't know if it makes a difference.

Tell us about yourself, Dino. You come up with such interesting questions.

Almost leads one to believe that you know just how to tweak the nose of those who espouse basic landscape concepts.

Makes it fun to read your posts. I think the last one included "marigolds". Now we have tree circles. And such insistence.

I say that if that's your thing and it suits your purposes, then go for it. Who are a bunch of virtual design geeks to say you nay?

wellspring,
I am your average person who doesn't know too much about landscaping. Why?....lol