If you like to cut circles . . .
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The simplest way possible?
Well, no need to cut out the circles yourself. Just get wreath rings that are square in cross-section:
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Get a styrofoam circle that is roughly the same diameter and glue the ring on top of the circle. Now you can carve entrances and such on the ring. If you want added height, get another ring, one with a greater inner diameter, and glue it on top.
They have those rings and circles in so many sizes and thicknesses:
If you aren't crazy about gluing the foam ring on top of the foam circle, then try gluing the ring on top of an MDF ring like these:
Regardless of the base you use, you can then get really thin adhesive cork liner and cover up the entire inside and outside with it, then carve it a little to give it more of a stone look.
Hope it helps a bit.
Dan