They do, but circulation cannot be totally stopped. This is a greater problem in outdoor pools but any pool will have some sort of temperature gradient that will inevitably result in circulation. Any water movement means slower times, at least in those events longer than 50m (1 length).
Surely that has far less effect than that of all the other swimmers? Naïvely I would think we should be running time trials of a single swimmer at a time before caring about any of this?