Download "Ringdroid (Social Edition)"
There are two versions, the one I mentioned is the one you want. From there you can create a username and create Ringtones. Its also an audio file editing software, so if you have an MP3 song on your phone, you can take that track and shorten it at ANY part of the song and make a ringtone out of it. Its really easy. When you download it search for me, leo9891. There are other people who upload ringtones aswell, you can browse or search for them. Also it allows you to make notification sounds, for text messages and other things like email alerts or Alarms.
EDIT: I just like the fact that I can make ringtones straight from my phone and upload them aswell. I used to use my PC to create then and then have to transfer it to my phone. This is less of a hassle.
BTW, its just a simple editing software, if you wanna do more such as fading in and out and other effects, stick with using a PC to do that kind of stuff.