I was messing with this today, and learned this:
For my Blackberry, it always uses the default Leaf 'ringtone', regardless of setting. It's not a BAD ringtone, unlike the default Toyota/JBL ringtone, which was intended to resuscitate zombies on Nyquil. But it seems fixed.
For the iPhone, the Leaf somehow downloads the ringtone the phone itself would play for that caller (after some delay) and uses that Ringtone with the option is set. I haven't seen that feature before, so it was indistinguishable from Magic to me.