In order to do that, one needs to root the phone.
Sites I've found on the Internet showed rooting the LG Optimus One P500 using z4root. But further readings showed that it only worked with the older software version. My unit came with Android version 2.2.1 and software version says its V10e-NOV-30-2010. I searched for other root programs and found Gingerbreak
Since I already have Dropbox installed on the phone, I just placed the file into my dropbox share directory and downloaded it into the LG. Run it and the unit is rooted.
Now that the phone is rooted, the next step is expanding the internal memory by using the sdcard as an expanded internal memory to hold the files.