Using an iPhone 4 original. Everything but custom ringtones works fine after upgrading to iOS5.
I've restored the phone twice (second time restored as new iPhone), un-installed iTunes 10.5 and deleted all related preferences and re-installed it. (Mac runnings 10.6.8)
Ringtones is missing on the top middle row of iTunes as possible areas to sync. Weird.
The ringtones appear in grey listed beneath the iPhone icon in iTunes. I've turned on and off Ringtones in iTunes preferences. I re-converted the audio files to .m4a to m4r and re-dragged them to the iPhone and tried to sync. No go.
I think I'm going to wipe the phone again and try syncing it on another Mac. Perhaps use the reset feature on the iPhone itself.