I remember a time when making ringtones used to be a very cumbersome experience. My technique of choice was to use the open-sourced Audacity then do various conversions in iTunes or Quicktime Pro by tweaking some of the advanced settings. However, the Web has spawned newer, less tedious methods. On of them, Audiko, is a particularly well-done effort, letting you grab audio tracks from your hard drive or the Web and customize them for use on your mobile phone.
While I think ringtones of popular songs are largely annoying and superfluous, the tools to create them are actually quite fun. Audiko simply layers the entire track on one timeline, while giving you a magnified area for each minute of the song to manipulate up to a 40-second ringtone from the segment of your choice. The entire editor is overlaid on a waveform of the song, and you can toggle whether or not you want a fade on the in and out, which can be helpful if your phone doesn't automatically do it for you.
When you're all finished creating your pocket masterpiece you've got three simple download options. One will save it as a normal mp3 ringtone compatible on most major handsets, as well as an option to download the .m4r iPhone-compatible ringtone--something you normally need an application like iToner or GarageBand (both Mac-only apps) to create. There's also a WAP-friendly URL to simply grab the audio file on your handset without having to sync to your desktop. Whatever you've created gets put into a pool of other songs, and you can even see and download other ringtones from the same artist that have been created by other users when you're all done.