Apple has released GarageBand update 4.1.1 which allows you to create custom ringtones for the iPhone.

According to the Apple knowledgebase document, with GarageBand 4.1.1, you can export your original song, your original audio recordings, or use Apple Loops and iLife jingles to create a custom ringtone for your iPhone. You'll need to select the cycle region and "send ringtone to iTunes". iTunes will then move it to your iPhone during your next sync. iPhone software version 1.1.2 is required.

Source: TUAW