Here is a neat web app that i found over at iPhoneHacks.com.
Its called Audiko. "Once you go to their website, you can startcreating a ringtone from your favorite song immediately as there is no registration required. You have an option to either create a ringtone from a song on your hard disk or by providing the URL of the song."
iphonehacks.com
Read more about it from i
PhoneHacks or go right to
Audiko here