One of things that make your phone personal is your own ringtones. Unfortunatelly there is a bit of a problem with iTunes when it comes to ringtones. Yes you are able to create ringtones on the fly BUT only for those records that you have downloaded from iTunes shop :-(.
But no worry: where there is a problem - there is solution! Do not get me wrong - I am not promoting piracy in any way but what Apple(tm) fails purposly to realise that people can buy records from other places and use those.
So here is the solution:
1. You need iTunes and you need to synch you iPhone.
2. Select the song you would like in iTunes, bring up the context menu (right click) and open "Get Info"
3. In the info panel on the "Options" tab set the start time and end time of the song you are playing to the maximum interval of 30 second since this is the maximum time that iPhone will allow for a rigtone. Do not worry it will not truncate the actual record.
4. Click OK to apply settings and open the context menu to create AAC Version of your selected interval (I believe on older version of iTunes you need to use convert function (BUT you need to set the encoder to AAC in the preferences)
5. After the conversion is done you will see another copy of the record (AAC converted) but the length will be 30 sec.
6. Use "Show in Finder" on Mac (and I believe it is called "Show in Explorer" on PC) to open the directory where the actual file is. Do not close it yet - we will need this in just a moment.
7. Delete the record from iTunes and when it asks for "keep the file" or "move to trash" you need to KEEP the file!.
8. Come back to your Finder/Explorer window and rename the extension of the AAC file from *.m4a to *.m4r.
You need to click "Use .m4r" if you are asked.
9. Open the renamed file - which will trigger it being identified as rigtone by iTunes. (if it does not work on PC try to open this file from the iTunes file menu)
10. Now you can click on your iPhone in iTunes devices section (remember to connect the iPhone) go to ringtones tab and press synch button.
11. Go to "Settings" app on your iPhone, "Sounds" menu, "Ringtone" and set the synched ringtone. Alternatively if you want to set it for a particular person - open their contact (in "Address book" app), press "Edit" button, and in the "ringtone" section add your custome rintone.
And you you are a happy iPhone user now with your custom ringtones...