Funny, my phone (a brand new Sony Ericsson K810i) allows me to do this absolutely for free. As do all other phones, at least in the EU/UK.
I take the MP3 or AAC that I own, throw it over to the phone and tell it to use it as a message or ring tone. The same process on the iPhone costs me a buck. Nice.
okay, everyone, please quit the FUD.
I'm in my T-Mobile SDA phone right now, under phone sounds, in the "ring tones" box, clicking on it to see my choices, MY MP3's DO NOT APPEAR....
Get a grip, you will be charged for ringtones here on out...