Someone pointed out that its not easy to get a ringtone on an iPhone, something that should be fairly easy and automatic like so many things with iPhone. It plays music, it has a phone -- what's the problem? Unfortunately, this is the old assumption that the iPhone is really just a computer with a phone hooked into it, but Apple isn't a computer company anymore. Now an online music retailer, ringtones are big business for Apple, accounting for millions in sales every year. They couldn't sell the iPhone and not sell ringtones in keeping with intellectual property of the artists.
Additionally, when you are an industry leader, you create money-making standards, like only playing a tiny handful of YOUR audio formats, using a hard-to-access file system, and having non-standard USB connectors. By contrast, the competition puts out players with standard connectors, plays a long list of formats, and you can search through the device just as if it were a USB drive. That's the type of thinking that makes ringtones something to be paid for.
That said, by and large I hate ringtones. I do not want to hear your rap-music-in-a-paper-cup-sounding bullshit. If you make a ringtone out of a recent top 40 song, you are a tool. A soft beep or low ringing noise is as much as I want to hear but if you just put it on vibrate, that'd be great.