I use bluegills as bait for LMB fishing. I was told that the preferable hook to use is a circle hook. If so, what size hook should I use? 

Depends on the size of the bluegills you're using and what style circle hook you're using. I prefer a Gamakatsu octopus circle, which is a thinner wire and has a wider gap. I stick to palm size baitfish, which should take about a 2/0 hook.

Through the lips, you might get away with a 1/0, but through the back you'll want a 2/0.

Remember, if you've never used them before, you don't set the hook with these.  Hold your rod tip up around 11:00 and just reel. The hook pivots as it begins to exit the mouth, hooking them in the upper lip. I use them all the time when teaching kids to fish because they so often gut hook fish with regular hooks.

If you are using big bait, use big hook I like 6/0 circles for big live bait