With the latest release of GarageBand (4.1.1), Apple is finally giving users a way to create free ringtones that doesn't require you to perform some sort of hack. To create your free iPhone ringtones, import the music to become the ringtone into GarageBand. Modify the clip as needed (it needs to be under 40 seconds) and perform any other changes you want. Once you have the ringtone the way you want it, go to Share -> Send Ringtone to iTunes in the menu bar. The ringtone will then be created in iTunes, and it will show up in your ringtones section which can then be synced to your iPhone.