1987 Image from YouTube
The theater opened with the park in 1980 and was located in the back of the park next to Ernie's Bed Bounce.
1980 Image from YouTube
In 1988 the stage area was repainted blue.
1988 Image from YouTube
In 2003 the theater was replaced with the 1-2-3 Smile With Me photo spot.
Image from Google Street Views
I have read some articles from 1999 that refers to the "all new Circle Theater" and an article from 2003 that also mentions the Circle Theater. It may be that the original Circle Theater closed down before 2003 and the Paradise Theater was called the Circle Theater for a time.
The theater housed many different shows over the years:
Sesame Players: This show consisted of two human performers who used a series of props to entertain children with a show that consisted of lots of problem solving questions that were asked of the audience.
Environmental Tales: On Environmental Awareness Day 1991 the Sesame Players did a special show about the environment.
A bird show featuring a trainer and a talented macaw.
Do you remember this theater or have any more information? Please let me know in the comments.