Okay, try to retain your composure—yeah, we know: we're talking about circumcision… but it's circumcision of the HEART, people… Jest if you must.
Circumcise yourselves to the Lord, remove the foreskin of your hearts, O people of Judah and inhabitants of Jerusalem, or else my wrath will go forth like fire, and burn with no one to quench it, because of the evil of your doings. (4:4)
Jeremiah realizes that in order for the people to stay on God's good side, they'll have to internalize the commandments rather than just be forced to follow them and get punished if they don't. The motivation will have to come from them. Jeremiah's probably tired of always having to be the enforcer on God's behalf and getting nowhere. So the circumcision, which represents God's covenant with the people, will have to be an inner event.
Actually, this particular symbol and verse—"the circumcised heart"—became a central point in the parting of the ways between Christianity and Judaism. Shortly after Jesus's death, there were Jewish followers of Jesus who believed that one still needed to observe certain ritual parts of the Mosaic Law, particularly circumcision and the dietary laws. However, the Apostle Paul argued against this, citing the above verse from Jeremiah.
Rather, a person is a Jew who is one inwardly, and real circumcision is a matter of the heart—it is spiritual and not literal. Such a person receives praise not from others but from God. (Romans 2:29)
On the other hand, staying within the book itself, Jeremiah isn't arguing against actual circumcision at all; he's just saying that it's not enough. Real obedience to God needs to have an inner as well as outer dimension—the heart and the emotions play a central role, as well as the physical body. After the destruction of the Temple and the exile to Babylon (and the much later destruction of the Second Temple in 70 CE), many rituals weren't available to the Jews. So the move toward inner devotion was a necessary one, and it had a huge influence on the subsequent development of Jewish worship and theology.
The Jewish theologian Abraham Joshua Heschel understood the circumcision of the heart to mean the removal of the protective layer around the heart that could get in the way of a completely intimate relationship between an individual and God. Only with that layer peeled away could there be a truly wholehearted relationship.