There are tons of ways to make them il show you one:
Pick the song you want to use
Go to www.mp3cut.net
Upload the song
You can split and cut which part of the song you want and then just hit download.
iPhones use .m4r so you'll need to convert the mp3.
Go to
http://www.iwfr.net/mp3toringtone/
Upload the song you just cut
In the drop down menu , Select the .m4r (iPhone ) option and click preview
You can now download the ringtone and import it to iTunes
On iTunes go the ringtone tab on the left hand side and click file-->add file to library--> select the tones you just converted
Sync them to your iPhone
On your phone head to Settings-->Sounds-->Ringtones and you'll see your new tones in the list.
If you update to iOS 5 you can also apply those tones as text tones and other alerts
Good luck
It Seems like a long thing but it's not hard, it's just that iPhones use the m4r format.