It turns out that it was much easier to create free iPhone ringtones than I thought it would be. I had feared that I would have to jailbreak my phone in order to get ringtones on it without buying the ringtones through iTunes, but that was not the case.
Basically all you have to do is have your audio file saved with an M4A file extension and then change M4A to M4R in the file name. Then double click on the file and iTunes will open it up as a ringtone.
I used a couple of free programs to edit my audio file to the desired ringtone length and then save it as an M4A file. Audacity (http://audacity.sourceforge.net/) worked for me as an audio editor because I have almost all of my audio saved as MP3s. Audacity will not work, and I don't know what else will, if you have your audio saved in a format that includes some sort of DRM. I then used Format Factory (http://www.formatoz.com/) to convert the audio files to M4A files. I highly recommend Format Factory for all sorts of audio and video conversion. It's free, it's easy, and it's even pretty quick.
Have fun with your new costless ringtones!