So I'm building a AE composition for an opening, and I want a round blob in my background, so I create a circle object, and I apply Gaussian blur to it, and make it take up most of the frame.

I am noticing that the blur is not smooth, there's banding, the gradient is clearly layered, straiated... not smooth.

Any idea how I can deal with this?

Check to make sure you have your display settings as Full Resolution (small drop down list to the right of the preview monitor window).

Yea, I checked. The blending is visible on export

I did find a fix though:
How to Remove Banding Artifacts in After Effects - Greyscalegorilla (http://greyscalegorilla.com/blog/2009/10/how-to-remove-banding-artifacts-in-after-effects/)

By adding a solid, and a Ramp effect, and upping the scatter property, it can basically add noise to help remove the problem.

He describes several tactics with dealing with it.

I am wondering though, I want a oval... how do I create that with a solid? Perhaps pre-compose it, and then stretch the new composition a little?

Perhaps also switching to 16-bit or 32-bit might help. Look for the switch at the bottom of the project panel. You have to alt-click it.