In an ancient MathLinks topic (post #6; but see below for a copy) I have given a proof of the inequality by reducing it to $\left(\sqrt{a}\vec{p}+\sqrt{b}\vec{q}+\sqrt{c}\vec{r}\right)^2\geq 0$, where multiplication means scalar product of vectors and $\vec{p}$, $\vec{q}$, $\vec{r}$ are unit length vectors chosen in such a way that the angles between them are $\pi-u$, $\pi-v$, $\pi-w$, respectively. This rewrites geometrically as follows: Pick a point $P$ in the plane, and take three points $A$, $B$, $C$ such that $PA=\sqrt{a}$, $PB=\sqrt{b}$, $PC=\sqrt{c}$, $\measuredangle BPC=\pi-u$, $\measuredangle CPA=\pi-v$ and $\measuredangle APB=\pi-w$. Then, the difference between the left hand side and the right hand side of your inequality is $9$ times the square of the distance between the point $P$ and the centroid of triangle $ABC$. Equality thus holds if and only if $P$ is the centroid of triangle $ABC$; this is equivalent to the assertion that the triangles $BPC$, $CPA$, $APB$ have equal areas; this, in turn, is equivalent to the assertion that $\sqrt{a}:\sqrt{b}:\sqrt{c}=\sin u:\sin v:\sin w$ (because the area of triangle $BPC$ is $\frac{1}{2}\cdot PB\cdot PC\cdot \sin\measuredangle BPC=\frac{1}{2}\sqrt{b}\sqrt{c}\sin u$ etc.).
For better searchability, let me copy my MathLinks posts over here (finding some old post on MathLinks is almost impossible as for now). Note that I do not claim originality for the theorems.
Theorem 1. Let $x$, $y$, $z$ be three real numbers and $A$, $B$, $C$ three real angles such that $A + B + C = 180^{\circ}$. Then,
$x^2+y^2+z^2\geq 2yz\cos A+2zx\cos B+2xy\cos C$.
Proof of Theorem 1. We will denote by $\measuredangle\left(\overrightarrow{p};\;\overrightarrow{q}\right)$ the directed angle between two vectors $\overrightarrow{p}$ and $\overrightarrow{q}$ (note that this is a directed angle modulo $360^{\circ}$).
For any two vectors $\overrightarrow{p}$ and $\overrightarrow{q}$, we are going to denote by $\overrightarrow{p}\cdot\overrightarrow{q}$ the scalar product of the vectors $\overrightarrow{p}$ and $\overrightarrow{q}$.
For any vector $\overrightarrow{p}$, we are going to denote by $\overrightarrow{p}^2$ the scalar product $\overrightarrow{p}\cdot\overrightarrow{p}$. Every vector $\overrightarrow{p}$ satisfies $\overrightarrow{p}^2=\left|\left|\overrightarrow{p}\right|\right|^2\geq 0$.
Let $\overrightarrow{a}$ be a vector of unit length. Let $\overrightarrow{b}$ be a vector of unit length such that $\measuredangle\left(\overrightarrow{a};\;\overrightarrow{b}\right)=180^{\circ}-C$. Let $\overrightarrow{c}$ be a vector of unit length such that $\measuredangle\left(\overrightarrow{b};\;\overrightarrow{c}\right)=180^{\circ}-A$. Then,
$\measuredangle\left(\overrightarrow{c};\;\overrightarrow{a}\right)=360^{\circ}-\measuredangle\left(\overrightarrow{a};\;\overrightarrow{b}\right)-\measuredangle\left(\overrightarrow{b};\;\overrightarrow{c}\right)$
$=360^{\circ}-\left(180^{\circ}-C\right)-\left(180^{\circ}-A\right)=C+A=180^{\circ}-B$
(since $A + B + C = 180^\circ$).
Now, all the vectors $\overrightarrow{a}$, $\overrightarrow{b}$ and $\overrightarrow{c}$ have unit length: $\left|\overrightarrow{a}\right|=\left|\overrightarrow{b}\right|=\left|\overrightarrow{c}\right|=1$. Thus, $\measuredangle\left(\overrightarrow{b};\;\overrightarrow{c}\right)=180^{\circ}-A$ yields
$\overrightarrow{b}\cdot\overrightarrow{c}=\left|\overrightarrow{b}\right|\cdot\left|\overrightarrow{c}\right|\cdot\cos\measuredangle\left(\overrightarrow{b};\;\overrightarrow{c}\right)=1\cdot 1\cdot\cos\left(180^{\circ}-A\right)=\cos\left(180^{\circ}-A\right)$
$=-\cos A$.
Similarly, we obtain $\overrightarrow{c}\cdot\overrightarrow{a}=-\cos B$ and $\overrightarrow{a}\cdot\overrightarrow{b}=-\cos C$. Thus,
$\left(x\cdot\overrightarrow{a}+y\cdot\overrightarrow{b}+z\cdot\overrightarrow{c}\right)^2$
$=\left(x\cdot\overrightarrow{a}\right)^2+\left(y\cdot\overrightarrow{b}\right)^2+\left(z\cdot\overrightarrow{c}\right)^2$
${}+2\cdot y\cdot\overrightarrow{b}\cdot z\cdot\overrightarrow{c}+2\cdot z\cdot\overrightarrow{c}\cdot x\cdot\overrightarrow{a}+2\cdot x\cdot\overrightarrow{a}\cdot y\cdot\overrightarrow{b}$
$=x^2\underbrace{\cdot\left|\overrightarrow{a}\right|^2}_{=1^2}+y^2\cdot\underbrace{\left|\overrightarrow{b}\right|^2}_{=1^2}+z^2\cdot\underbrace{\left|\overrightarrow{c}\right|^2}_{=1^2}+2yz\cdot\underbrace{\overrightarrow{b}\cdot\overrightarrow{c}}_{=-\cos A}+2zx\cdot\underbrace{\overrightarrow{c}\cdot\overrightarrow{a}}_{=-\cos B}+2xy\cdot\underbrace{\overrightarrow{a}\cdot\overrightarrow{b}}_{=-\cos C}$
$=x^2\cdot 1^2+y^2\cdot 1^2+z^2\cdot 1^2+2yz\cdot\left(-\cos A\right)+2zx\cdot\left(-\cos B\right)+2xy\cdot\left(-\cos C\right)$
$=x^2+y^2+z^2-2yz\cos A-2zx\cos B-2xy\cos C$.
Since we, obviously, have $\left(x\cdot\overrightarrow{a}+y\cdot\overrightarrow{b}+z\cdot\overrightarrow{c}\right)^2\geq 0$, we thus get $x^2+y^2+z^2-2yz\cos A-2zx\cos B-2xy\cos C\geq 0$, so that $x^2+y^2+z^2\geq 2yz\cos A+2zx\cos B+2xy\cos C$, and Theorem 1 is proven.
Other proofs of Theorem 1 can be found at http://www.artofproblemsolving.com/Forum/viewtopic.php?t=5243 and http://www.artofproblemsolving.com/Forum/viewtopic.php?t=42509 .
Theorem 1 is equivalent to the following, also quite useful (for olympiad mathematics and magazine problem sections, that is, although I would not be surprised to see more applications) inequality:
Theorem 2. Let $x$, $y$, $z$ be three real numbers and $A$, $B$, $C$ three real angles such that $A + B + C$ is a multiple of $180^{\circ}$. Then,
$ \left(x + y + z\right)^{2}\geq 4\left(yz\sin^{2}A + zx\sin^{2}B + xy\sin^{2}C\right)$.
We will only show a proof of Theorem 2 using Theorem 1: First, we can WLOG assume that $A + B + C = 180^{\circ}$. This is because the inequality
$ \left(x + y + z\right)^{2}\geq 4\left(yz\sin^{2}A + zx\sin^{2}B + xy\sin^{2}C\right)$
will not change if we add a multiple of 180° to one of the angles A, B and C (because $ \sin^{2}\left(180^{\circ} + u\right) = \sin^{2}u$ for every u), and consequently, since A + B + C is a multiple of 180°, we can add a multiple of 180° to the angle A such that, after this, we will have A + B + C = 180°.
Now, for A + B + C = 180°, we have
$ \left(180^{\circ} - 2A\right) + \left(180^{\circ} - 2B\right) + \left(180^{\circ} - 2C\right) = 540^{\circ} - 2\cdot\left(A + B + C\right)$
$ = 540^{\circ} - 2\cdot 180^{\circ} = 180^{\circ}$.
Hence, Theorem 1 (applied to $ 180^{\circ}-2A$, $ 180^{\circ}-2B$, $ 180^{\circ}-2C$ instead of $ A$, $ B$, $ C$) yields
$ x^{2} + y^{2} + z^{2}\geq 2yz\cos\left(180^{\circ} - 2A\right) + 2zx\cos\left(180^{\circ} - 2B\right) + 2xy\cos\left(180^{\circ} - 2C\right)$.
Since $ \cos\left(180^{\circ} - 2A\right) = - \cos\left(2A\right) = - \left(1 - 2\sin^{2}A\right) = 2\sin^{2}A - 1$ and similarly $ \cos\left(180^{\circ} - 2B\right) = 2\sin^{2}B - 1$ and $ \cos\left(180^{\circ} - 2C\right) = 2\sin^{2}C - 1$, this becomes
$ x^{2} + y^{2} + z^{2}\geq 2yz\left(2\sin^{2}A - 1\right) + 2zx\left(2\sin^{2}B - 1\right) + 2xy\left(2\sin^{2}C - 1\right)$
$ \Longleftrightarrow\ \ \ \ \ x^{2} + y^{2} + z^{2}\geq 4\left(yz\sin^{2}A + zx\sin^{2}B + xy\sin^{2}C\right) - \left(2yz + 2zx + 2xy\right)$
$ \Longleftrightarrow\ \ \ \ \ x^{2} + y^{2} + z^{2} + \left(2yz + 2zx + 2xy\right)\geq 4\left(yz\sin^{2}A + zx\sin^{2}B + xy\sin^{2}C\right)$
$ \Longleftrightarrow\ \ \ \ \ \left(x + y + z\right)^{2}\geq 4\left(yz\sin^{2}A + zx\sin^{2}B + xy\sin^{2}C\right)$,
and Theorem 2 is proven.
Theorem 2 also trivially follows from http://www.mathlinks.ro/Forum/viewtopic.php?t=15558 and was also discussed at http://www.mathlinks.ro/Forum/viewtopic.php?t=3849 ...
I don't know of a "reasonable geometric interpretation of the sum of squares of sides of a polygon inscribed in a circle". I do, however, find a proof without explicit induction that to some extent explains the formula, and may be simpler than the proof of original proposer (OP), so it might be of some interest to some readers and perhaps also the OP. It is not simple enough to fit in a comment so I must post it as an answer.
By homogeneity we may assume the circle has diameter 1, which will simplify the formulas. I'll use $j$ rather than $i$ for the index because I'll need $i$ to be $\sqrt{-1}$.
Each $a_j$ is the side of a right triangle with hypotenuse 1 and opposite angle $\alpha_j$. Hence $a_j = \sin \alpha_j$, and the left-hand side is $\sum_{j=1}^n a_j^2$.
Each term in the sum on the right-hand side, call it $S$, is $-\prod_{j=1}^n \cos \alpha_j$ times $(-1)^{k/2} k$ times a product of $k$ factors $a_j / \cos \alpha_j = \tan \alpha_j$ with distinct $j$'s, for some even integer $k>0$. We might as well include $k=0$ because then $(-1)^{k/2} k = 0$.
To access this sum, consider the finite generating function (or generating polynomial)
$$
P(X) := \prod_{j=1}^n (1 + i \tan \alpha_j \cdot X).
$$
Expand, sum the coefficients, and take the real part. That almost matches $-S$, except that the $X^k$ coefficients are missing the factor $k$. To get that factor, differentiate and set $X=1$:
$$
-S = \left(\prod_{j=1}^n \cos \alpha_j \right) {\rm Re}\left( P\phantom{|}'(X)|_{X=1}\right)
=\left(\prod_{j=1}^n \cos \alpha_j \right) {\rm Re}\left( P(1) \phantom{/}\sum_{j=1}^n \frac{i \tan \alpha_j}{1 + i \tan \alpha_j \cdot X} \Biggl|_{X=1}\Biggr.\right).
$$
But $P(1)$ is the product of terms $1+i\tan\alpha_j = e^{i \alpha_j} / \cos \alpha_j$, and (aha) $\sum_j \alpha_j = \pi$ because each $\alpha_j$ is half the angle subtended by the $j$-th side about the center of the circle. Hence $P(1)$ is the real number $-1 / \prod_{j=1}^n \cos \alpha_j$, and $S$ simplifies to
$$
+ \sum_{j=1}^n \phantom| {\rm Re} \frac{i \tan \alpha_j}{1 + i \tan \alpha_j}
= \sum_{j=1}^n \phantom| \frac{\tan^2 \alpha_j} {1+\tan^2 \alpha_j}
= \sum_{j=1}^n \phantom| \sin^2 \alpha_j,
$$
QED.
Best Answer
With binomial theorem, the products on the right have closed form $$ \sum_{|A|=n} \prod_{i \in A} \sin \theta_i \prod_{i \notin A} \cos \theta_i = \prod_{i=1}^n ( \sin \theta_i + \cos \theta_i )^n = \prod_{i=1}^n \sqrt{2} \sin (\theta_i + \pi/4)^n$$ So we'll let $x = \sin \theta + \cos \theta$ so the first sum looks like $$ \sum_{n \geq 0,\text{ even}} (-1)^{n/2} \prod_{i=1}^n x_i = 1 - x_1x_2 + x_1x_2x_3x_4 - \dots$$ This is not symmetric in the x's.