How to set MP3 ringtone in Android (Nexus S)
This isn't the "correct" way, but IMO it's a good way: use Ringdroid. With it, you can cut a suitable part of the MP3 to be used as a ringtone. This way you can get rid of those pesky intros on songs that have a slow start and save space by not having the entire MP3 duplicate in your ringtones folder.