Make iPhone Ringtone makes use of the more stable "stik" method of creating ringtones and is compatible with iTunes 7.4.1, the ultimate ringtone hack discovered by Cleverboy. (read, iPhoneHacks.com, iPhone hacking genius reveals yet another ringtone hack)
Rogue Amoeba with MakeiPhoneRingtone has made the process of adding custom ringtones as easy as possible, all you need to do is drag and drop AAC file onto this tiny app, and like magic they'll show up in the iPhone ringtones tab. Sync your iPhone and they'll ready for use.