You can't actually do it with songs purchased in iTunes because of DRM lol. But you can throw any unprotected MP3 through the process and do it for free.
I thought they locked that out.
You used to be able to shorten any song to 30 seconds and change the extension to .mr or something like that, but they changed the way that you could get around that as well I thought.
Oh they did? WELL THEN NEVERMIND. That is how my friend did it a long ass time ago. My brother used a ringtone from a song recently but his is jailbroken.
He might want to fix it then.