I removed my ringtones from my iPhone via iTunes and then reinstalled them. Still having this same issue. My ringtones were purchased off iTunes originally. Not sure if that has anything to do with it.
UPDATE: Ok, I changed my ringtone from one a purchased on iTunes to a different custom tone I uploaded to the phone myself. I then did a hard restart on the phone (held down the power and home buttons until the Apple logo appeared). Then I had a friend call, my custom ringtone worked. So I switched back to the iTunes ringtone and we tried again. Worked that time too. So, I don't know if it was the hard restart or the changing of the tone choice, but its working now.