Actually, there very well could be copyright protection for using songs purchased through iTunes for custom ringtones. I have not taken any copyright classes in law school yet, so I don't know the entire legal standing, but I can see where
@Shirasaki is coming from.
Upon research and consulting those that have taken copyright, you are essentially taking a song and editing it without permission. Its called "unauthorized derivative work" which indeed does violate copyright law. So, it is an illegal act.
Now is someone going to come after you? No, of course not, unless you started selling it, but thats a different story. But as far as copyright law is concerned, it is technically illegal to make a custom ringtone from a song without permission from the artist.