God is so serious about covenant that he almost killed Moses for not circumcising his son (sign of the Abrahamic Covenant) and God told Joshua to circumcise the 2nd generation (out of wilderness, 20 years old and upward) before going in to take the Promised Land. Abraham was declared righteous before he was circumcised (sign of the Abrahamic Covenant). We Believers are partakers of the New Covenant as well as the everlasting Abrahamic Covenant as we are "those who are of faith", yet we are not required to circumcise our sons.
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In my opinion, the difference in emphasis on the practice of circumcision between the Old and New Testaments is accounted for by the life, death, and resurrection of Christ. Although Abraham lived prior to the giving of the Law, the covenant of circumcision that God made with him was a forerunner of the Law in the form of a command that had to be obeyed. The subsequent perfect fulfillment of the Law on our behalf by Christ, followed by His atoning death and His resurrection, made this practice no longer necessary to be saved, since (as noted in the question) justification now occurs on the basis of faith in Christ's finished work of salvation, rather than through the keeping of the Law (of which circumcision was an external sign or part). (Although, as Paul discusses extensively in Romans, even those who were justified in the Old Testament were also actually justified on the basis of faith, since no one is (or can be) saved by obedience to the Law.) In a sense, circumcision of Christians does still occur, but (as Paul noted in Romans 2:29) it now occurs in the heart, and is spiritual, rather than literal. Paul even says that, if a Christian man seeks to be physically circumcised in the belief that it is still a requirement that he has to fulfill in order to be saved, it severs him from Christ; once again puts him under a yoke of slavery (that is, a requirement to obey the Law perfectly); and makes the redemption won by Christ of no advantage or value to him (Galatians 5:1-4).
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