Use the App Ringtones it's made by Limit Point Software
1) Launch the App and select songs from iPod option
2) Select the song that you want
3) cut the song where you want your ringtone to start and stop
4) Hit the save button (looks like a floppy disk, it's to the right of the play button)
5) Hook your iPhone up to iTunes
6) Go to the Devices and click on your iPhone
7) click on Apps (it's one of the tabs that appears across the top)
8) Scroll down and you'll see File Sharing and click on Ringtones
9)Look for the song that you created
10) Left click on the song once and hit Save To
11) Save it to your desktop
12) Create a folder in iTunes called Ringtones (File then click on new folder and title it ringtones)
13) Drag your Ringtone from your desktop onto the Ringtones folder
14) Go into the ringtones folder and drag your ringtone onto your iPhone that's in the Devices Tab
15) Sync your iPhone and you're done