I've done this many times with Vegas:
1) Create the audio track that you want to be your iPhone ringtone.
2) Save as mp4 file (I've saved as MainConcept AAC/mp4 file. For some reason, it wouldn't save as a MainConcept mp4 without a video track in the veg file but I just unchecked the Video option in the Custom render options). The Sony mp4 render option may work easier.
3) Go to the rendered mp4 file via whatever Explorer program you use, and change the extension to m4r. If you need it, you can download the free Extension Changer program via download.com).
4) Making sure iTunes is already open, just double-click the m4r file, and the ringtone should now show up in iTunes in the Ringtones Library.
You don't need Vegas to do this.
In itunes go to your music folder.
Select any mp3 file
Right click and select "get info"
Click "options" tab
In the "start"and "sop"time fields select 20 to 30 seconds for ringtone.
click OK
Right click the mp3, select create AAC version.
iTunes will create another file with M4A extension (I think)
Rename that extension to M4R
now drag that new file to ringtones folder and sync.
LightAds,
I may be wrong, but isn't there a 0.99 charge each time you do it via iTunes, though? And you may only be able to do this with the songs you purchased via iTunes.
There is no cost IF you do this from your own CD's or your own MP3's. Open iTunes then open Explorer then drag the MP3 from Explorer to iTunes. Then in iTunes drag from music folder to your device.
Seems not easy to make ringtones for iPhone. But it's quite easy to get free ringtones for Androidfrom online. I usually download free ringtones from FunForMobile and Zedge.