I'm using Itunes 7.4 (which if ya google you can still d/l it) and an iphone 1.1.1 that I unlocked with touchfree.

the whole reason i unlocked my iphone was to put some decent ringtones on it but i'm having a hard time..I've done some reasearch and ppl claim it works for them but last i heard it was with 1.02 fw
here is the method for itunes 7.4, totally legit method
1. open mp3 ringtone to iTunes
2. convert to AAC under "Advanced"
3. Right click new AAC file in playlist and click "get info." Memorize file location.
4. Now delete the mp3 ringtone and AAC file from iTunes Playlist but choose to "keep files"
5. goto itunes folder where AAC(m4a) ringtone is. Change from m4a to m4r by right clicking
6. Double click this m4r file (this will add it to iTunes ringtones)
7. goto iTunes Ringtones folder and change from m4r to m4a by right clicking
8. in iTunes play the ringtone file, it will give you an error that it can't find the file and it will ask if you want to find it. Hit yes and locate the file you just changed the exntension on in step 8. iTunes should automatically open this folder.
9. sync iPhone, enjoy your new ringtone

in short:
mp3--> m4a-->m4r-->m4a


I follow those exact steps and done them several times to make sure i got it right. Itunes says the ringtones sync over but when i go to settings>sounds> i dont see them there
so i wonder does this work with version 1.1.1 and itunes 7.4 ?
also i'm wondering thes may be steps for use with 7.4.1 and i'musing 7.4