Hello Stewart,
Telephone searches all standard sound locations for ringtones. Yes, one of them is System/Library/Sounds. But as you noticed, files copied there are not guaranteed to survive the OS updates.
Another, and more recommended, location is the user’s Sounds directory located at ~/Library/Sounds. By default, the user’s Library is hidden, but you can easily open it by pressing Shift-Command-G in Finder and entering ~/Library/Sounds in the text field. This directory is less likely to be emptied on OS updates.
Alexei