Thankfully, Apple has given in on the ridiculous ringtone limitations of the iPhone. In the latest update of Garageband Apple has added a new way to “share” what your created (or imported and chopped) music. Now you can make custom Ringtones, send them to iTunes and sync them to your iPhone.
Of course, DRMed tracks from iTunes can’t be imported, but you can always burn those to a CD, then re-import them to work around it. Or you can just save the time and pay .99 cents more for the Ringtone feature in iTunes.
It’s your call.