As you are rotating 360 degrees, nothing is happening (because 360 degrees is a full circle). What you probably are trying to achieve is to animate this rotation so that it is visible. For this you need to set a transition in your css:
#container {
margin: auto;
width: 500px;
-webkit-transition: all 1s ease-in-out;
-moz-transition: all 1s ease-in-out;
-o-transition: all 1s ease-in-out;
transition: all 1s ease-in-out;
}
#container img:hover{
-webkit-transform: rotate(360deg);
-moz-transform: rotate(360deg);
-o-transform: rotate(360deg);
-ms-transform: rotate(360deg);
}