Try to not think in terms of circular orbits.
Increasing velocity of a body in a circular orbit does not simply change into a different circular orbit, but gives it a 'kick' that changes the orbit to an elliptical one. It starts to move farther away from the central body, slowing down as it moves farther away. Finally, it reaches the apoapsis(the point furthest away). Here, it has too low a velocity to stay at this distance, so it gets closer again, increasing its velocity as it moves towards the periapsis(closest point) again.
If you wanted to make the orbit circular again, you'd have to give the body an extra kick(like firing thrusters of a rocket) at the apoapsis, so that it has enough orbital velocity at that point to move in a circle.
It's all according to the conservation of energy - you give the body extra KE, and as it moves away it exchanges it for PE, and then back again.
I always recommend playing the free game "Orbiter", which let's you fly spaceships around the solar system and learn all the quirks of orbital mechanics by heart. To be found here:
http://orbit.medphys.ucl.ac.uk/
There's also the arguably more fun, albeit less free "Kerbal Space Program".
By the way, if you were to increase Earth's orbital speed to that of Mercury's(~48km/s), it would exceed the escape velocity w/r to the Sun at 1AU(~42km/s), and it'd drift away on a hyperbolic trajectory.
@tiny-tim:
I think you got that bit about firing retro rockets backwards. You need to add energy to the orbit to circularise it at the apoapsis, not slow it down further. That would only serve to lower the periapsis, instead of rising it.