If you have a MP3 or music file that you like, and want to use it as a ringtone in your iPhone, follow this process:

1) Locate the music file in iTunes.
2) Right click on the file, and click the "Information" menu item.
3) In the dialog that pops up, select the Options tab, and then select the range of music that you want for the ringtone (select the start and end time moments). Click OK to confirm.
4) Right-click again on the music file, but this time click the "Convert selection to AAC" menu item.
5) The previous step creates a new music file in iTunes, with the same name but with different length (according to what you specified in step 3). Click on this new file and drag & drop it to the Windows/Mac Desktop.
6) Rename the file extension from .m4a to .m4r
7) Double click the .m4r file, and it iTunes will list it under the Ringtones section
8) Connect your iPhone to iTunes, go to the Ringtones tab, and select the option to synchronize them
9) Synchronize the iPhone with iTunes
10) On the iPhone, tap Settings / Souds, and then Ringtone. In the ringtone selection screen you'll now be able to select the new custom ringtone.