Apple released iTunes 7.4.2 earlier today, officially geared towards addressing an "issue with creating ringtones using iTunes Plus song purchases and includes bug fixes to improve stability and performance," according to Apple's release notes. For many users, however, the update seems to have made matters worse.
Though, like last time, it may only be a short while before Apple releases yet another iTunes update to close up a ringtone loophole - free ringtones are back under iTunes 7.4.1.
iTunes 7.4.1 was released just the other day as a remedy to the free ringtones loophole discovered by a MacRumors forum reader which allowed any music file to be used on the iPhone as a ringtone simply by renaming the file to an .M4R extension and bringing it into iTunes.
Though 7.4.1 broke the original method, as it turns out, a very similar and only slightly more complicated method will let you accomplish the same feat under the latest version of iTunes.