It looks like not every WP7 handset uses MicroSD for their on-board storage. An XDA user has taken screwdrivers to his LG Optimus 7, and pulled it to shreds. Instead of the MicroSD that most have for storage, the Optimus 7 has a soldered on 16GB HYNIX NAND chip. While this obviously can’t be swapped out as easily as a MicroSD, it should be faster and more stable — you’re just stuck with the 16GB.
Reading the notes about how he took the thing apart, it’s a pretty brutal stripdown, and definitely not something to be taken lightly. If you have an LG Optimus 7, I don’t think you’re going to be taking it apart lightly.