Making free ringtones on Linux is very easy. All you need is an audio file (like an MP3 of your favorite song), and a free sound editing program called Audacity.
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First, download Audacity. If you are using Ubuntu, you can do it through Synaptic. You should be able to get Audacity by making sure you have the Universe and Multiverse repositories enabled and then typing the following command in a terminal:
sudo apt-get install audacity
If the above doesn't make sense to you and you don't know how to install software on Ubuntu yet, check out the how to install anything on Ubuntu tutorial on MonkeyBlog.org.
I had trouble getting Audacity to recognize my soundcard in Ubuntu Gutsy Gibbon on my Thinkpad T43, but it was easily fixed by running the following command in a terminal:
sudo apt-get install alsa-oss
Once Audacity is running, open your song with File > Open or Ctrl-o. Use the mouse to highlight the portion of the song that you want to use for your ringtone and then press Ctrl-t to trim the song to just the highlighted section.
If you would like to add effects like fade-in or fade-out, just highlight the section of the song that you would like to add the effect to and the apply the desired effect with the Effect menu.
Here is Audacity making a 10-second ringtone on Ubuntu Linux, with the final section of the ringtone highlighted:

Once you have made your ringtone, you can export it with File > Export. On the save dialog, choose MP3 on the bottom right:

Email the MP3 ringtone to your cell phone, or use whatever method that your mobile phone manual recommends for downloading MP3 ringtones.
I originally learned this technique on how to make free ringtones here, but adapted it for Linux because I don't use Microsoft Windows.
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