Update 2: If you are running a Mac with iLife 08 then you can export your own ringtones from Garageband. I’d suggest running some filters to remove excess bass (as your phone will not do anything but bleed the audio into a glob of horrible-soundingness) and each ringtone has a maximum limit of 40 seconds.

Update: Ok, outdated post now that iPhone ringtones can be purchased from the iTunes store…but I’d rather be able to make some of my OWN music into ringtones – just too bad I can’t do that!

Steve Jobs’ original plan was to allow people to create their own ringtones out of the music they had put on their iPhones. The RIAA found this out and shot it down. How auto-mating a song to play out loud when an incoming call is recieved is any different than simply playing a song out loud on your iphone is illegal – is beyond me. Stupid copyright laws…

From http://www.ipodobserver.com/story/32996

“While the RIAA won the right to not pay performers royalties for ringtones, it simultaneously maintained the right to collect the monies for those ringtones. In addition, they wanted to make darn sure that any ringtones generated on the iPhone had to pay that royalty. The result was that Apple had to delay its ringtone plans and come up with the scheme that Steve Jobs announced on September 5th.”