Don't use an array: the duplivert, as the other answer says, will replicate your capsule at every wheel's vertex. Just put the pivot of the duplicated mesh where you want them to be "pinned" to the circle, and clear its origin (this makes wheel's and capsule origine to be in the same point in 3d space).
The other problem you have, align capsules to the ground, can be done in two ways:
The first one is simple, but somewhat limited: select the original capsule and set a "limit rotation" constraint for the wheel rotation axis, to min 0°/ max 0°. Thus, when you rotate the wheel, the dupli-capsules spin around but their "base" keeps parallel to the ground.
If you wish your capsule to behave more realistically (eg: individually oscillating to wind, or when the wheel stops) you need to make them real (see CTRL-A menu) and then set up for each some "rigid body" joint to make them behave like real object suspended by real joints... if you need this I'll try to get something to explain.
Here is a hint on how a rigid body constraint could be used for that:
which, applied to the wheel concept could behave like this: