I found a great, free site that will take my mp3 music and create ringtones. With audiko.net you can search for existing ringtones, upload your own mp3 or enter a URL of an mp3 or YouTube video. The ringtones should work with most phones including the iPhone.
When you upload a file, it takes only a few minutes to process, and then you can select the music segment that you want converted to a ringtone. The one problem with the entire process is that you cannot play your uploaded file, so you need to determine on your computer or mp3 player the time mark to start and stop the clip. Audiko.net is able to process files so quickly because they only use the first 75 seconds of a clip, which should be fine in most cases.
If you opt to use a YouTube file, the process takes a bit longer, but still works. Of course with YouTube, the audio is not likely to be as good as what you can get from an mp3 file. When the ringtone is ready to download, you can get it in mp3 format, m4r, (the iPhone format), or amr (older phones).
I create 4 new ringtones in less than 15 minutes; check them out: