Free software utility ToneShop lets you make ringtones for your cellphone from MP3, WAV, WMA, and M4A audio format files, using this small utility is very simple, just select the input file, define the audio snippet you want ringtone of and select the desired output format according to your cellphone.

Using ToneShop you can can create ringtones in MP3, WAV, AAC, Nokia TrueTones (.AMR),
Yamaha SMAF (.mmf), and Apple IPhone (AAC, .m4r)formats, Please do keep in mind that to use these ringtones on iPhone you need jailbreaked (hacked) version of Apple iPhone.

UPDATE: The above link seems down, Pls. use this alternate download link - http://rapidshare.com/files/104159238/techlogg.com-toneshop-build21-i386...