Customized iPhone ringtones

If your phone is NOT jailbroken:

Getting a customized ringtone:
- Go to iTunes and find the track that you want to convert to an iPhone ringtone. If you don't see the track in the iTunes library, then click 'File' menu on iTunes and select 'Add File to Library'.
- Right-click on that track
- Select 'Get Info'
- Select 'Options' tab
- Check 'Stop Time' and enter a number based on how short you want the track to be. For example if you just want the first 30 seconds of the track, then 'Start Time' would be 0:00 and 'Stop Time' would be 0:30. So like this you can even select a section of the track from the middle.
- Click 'Ok'
- Now you will see the track listed again on iTunes.
- Right-click on the track and select 'Create AAC version'
- In a short while a copy of your track will be created. But the length of the track will be limited to the time that you chose.
- Now go back to the original track, right-click and select 'Get Info' and reset the stop and/or start time that you changed so that the track can be played back completely like before.
- Now find where the copy of your track (the short one) exists on your hard drive.
- The track would be listed as a .m4a file. Rename it to be .m4r
- Now go back to iTunes and add this file to the library.

Syncing:
When you connect iPhone to your computer iTunes will start syncing everything by default. So you should be able to find the ringtone after the 1st time you connect your iPhone to your computer. If not, go to iPhone details in iTunes. Select 'Ringtones' tab and make sure 'Sync Ringtones' is checked and also 'All Ringtones'.


If your iPhone is jailbroken:

Follow same steps as above to get your custom ringtone.
To get that ringtone on the phone, you need to have Cydia and OpenSSH. I'm still figuring out the details. Will post as soon as it's done.