There are a ton of ways of going about this. iTunes would be the "easiest" choice but it comes with a price. Now it all depends on if you are jailbroken or not. If you are then you can use iBrickr (among other programs) to get ringtones onto your phone. You can also use the iTunes workaround that allows you to make ringtones for free by converting them to AAC and then switching them to the ringtone format (I'll find instructions for that and post them in a minute).
As far as MAKING the ringtone, as in, editing the song of your choice, just Google free mp3 editors and you should find some good, free software that will allow you to edit the song to your liking.
KNK recommended Audacity as an editor. It's free and easily Google-able.
|