Sorry for not being too clear. What I am going to do is to translate your formulation to the common one, in polar coordinates. Don't be worried, the results are the same ones that you are obtaining. I only want to clarify the things to the foreign reader.
Your problem is a translating cylinder with velocity [tex]U[/tex] in a fluid at rest. You are considering plane potential flow ([tex]Re\rightarrow \infty[/tex]), with the reference frame attached to the fluid at rest. In stream function formulation, your problem is:
[tex]\nabla^2 \psi=0[/tex]
with [tex]u_r=\frac{1}{r}\frac{\partial \psi}{\partial \theta}=Ucos\theta[/tex] at [tex]r=R[/tex] and [tex]u_r,u_\theta\rightarrow 0[/tex] as [tex]r\rightarrow \infty[/tex].
The solution to this problem, as you point out, is [tex]\psi=-U\frac{R^2}{r}sin\theta[/tex]. This IS the actual solution of YOUR problem.
On the other hand, the radial laplacian operator has a fundamental solution, an Eigensolution: [tex]log(r)[/tex], which turns out to be the Green's Function of the radial laplacian operator. If you add this eigensolution to the former solution the flow field becomes altered, but still the new solution yields the boundary conditions:
[tex]\psi=-U\frac{R^2}{r}sin\theta+A\cdot log\left(\frac{r^2}{R^2}\right)[/tex].
The constant [tex]A[/tex] represents, as you well said, a measure of the circulation in the flow field. The explanation of why [tex]A=0[/tex] in your problem, in which the cylinder only translates, can be stated in two ways, which are equivalent:
1) The circulation in the flow field is 0. There is no reason for thinking that the translation of the cylinder introduces circulation, due to the fact that the problem contains symmetry. By introducing the logarithmic term you are introducing a point vortex at the origin, a singularity. The vortex is inducing azimuthal rotation in the flow field. Due to the fact that the cylinder does not rotate and the fluid is at rest at infinity [tex]A=0[/tex].
2) As it is said, the eigensolution is a measure of the circulation in the flow field. How is the circulation introduced?. In this problem the circulation may be introduced by means of rotating the cylinder. DO NOT forget that potential flow is only an asymptotic expansion of N-S equations for [tex]Re\rightarrow\infty[/tex], and therefore corresponds to the leading order term, not taking into account viscous effects. But these effects do exist on the solid boundaries. The circulation itself is introduced by means of viscosity, inside the boundary layer. The flow field is thus divided in the OUTER (irrotational) solution--- where [tex]\psi[/tex] can have all the eigensolutions that you want and it satisfies the non-penetration boundary condition---, and the INNER (viscous) solution---which corresponds to the boundary layer flow---. Both solutions must MATCH in the overlapping region. If you solve the boundary layer flow around the cylinder, the leading term of the boundary layer solution MUST match with the leading term of the outer potential flow (the stream function calculated above). As the circulation is introduced from the rotational motion of the cylinder and this motion is propagated through the boundary layer via the non slip condition, it can be derived that in the process of matching you would obtain [tex]A=0[/tex].
Hope my answer makes you happier. Actually, this is one of the best questions I have ever found in PF about fluid mechanics. I do not understand how this question is hidden in the HWK forum, it should be posted in one of the main sections.