The problem with 1.1.1 is that Apple has started encrypting and signing all iPhone content. This extra security layer makes the iPhone reject unofficial ringtones. In a phone call, Ambrosia said they are fixing the product, remain extremely optimistic and that users should look for a software update in the "very near future".
The full text of the statement is after the jump.
Ambrosia Software statement on iToner & the iPhone 1.1.1 OS Update
Apple has recently released iPhone 1.1.1 OS update for the iPhone.
Unfortunately this OS update breaks our custom ringtone product iToner.
We're distressed about this turn of events, because we have labored
long and hard to make iToner not just a great product, but also as
compatible as possible.
I'd like to take a moment to explain the situation as we understand
This iPhone 1.1.1 OS update breaks not only iToner, but also every
other piece of third party software for the iPhone. It appears that
Apple has taken the route of encrypting and signing the contents of
your iPhone in such a way that things like third party applications
and ringtones are rejected outright.
We have not given up, however. No promises at this point, but we are
working hard at solving this issue for our users. Thank you for your
continued support & patience.
Ambrosia Software, Inc.