About this guide:
This is a step-by-step, spoon-fed guide for implementing Link2SD on your Optimus S in order to effectively increase your internal memory so that you can install more apps and get rid of that "low storage space" warning. I prefer the Link2SD method over the Data2EXT method of expanding memory but this guide explains the pros & cons of both (below). If you prefer to use the Data2EXT method, check out the_Data2EXT instructions here. Note that in order to implement Link2SD or Data2EXT, you need to be rooted with an appropriate custom ROM installed, and with the ability to grant Superuser permission. This will not work with the stock Sprint ROMs. Instructions for rooting and installing a custom ROM are linked below.

Background:
The Optimus S is a great bargain (especially for those of us who were grandfathered-into Sprint's $10/month-cheaper data plan). But the Optimus S is a relatively low-end smartphone and the lack of internal memory for apps can be frustrating. However, if you (1) install an appropriate custom ROM and (2) you implement a memory-expanding utility like Link2SD or Data2EXT, you'll find that the Optimus S performs quite well and will have enough memory to install about as many apps as you could possibly want-- making this relatively low-end phone a very nice, cost-effective solution for those who don't need higher-end functionality like 4G, 3D-gaming, big screen, etc. The Link2SD and Data2EXT methods essentially let you move (at least some of) your apps and/or data from your phone's internal storage to your phone's SD card, thereby providing you with more storage space for apps, email, and other data. Note that both of these methods of moving apps & data to your SD card create much more space than if you were to just use Android's built-in "Apps2SD" functionality (whereby you move parts of some apps using the Setting/Applications/Manage-Applications menu).

Pros & Cons of Link2SD & Data2EXT:
The advantage of the Data2EXT method is that it moves all of your apps & app-data to an SD card-partition thereby potentially giving you more useable space than you would have with the Link2SD method. (But see caveat below.) The disadvantage of the Data2EXT method is that if anything goes wrong with your microSD card or you remove it, the phone may become unusable. The other disadvantage of Data2EXT is that it's a bit more complicated to implement. The advantage of Link2SD is that (with the exception of some critical Android system apps) you can choose which apps & app-data to move to the microSD-card, so if your microSD card fails or is removed, the phone will still work-- just not the apps on the microSD card. (For that reason, in addition to keeping critical system apps on the phone, like the web browser and phone dialer, I also keep some of my recovery and safety apps in the phone's internal memory, like Titanium Backup, Where's My Droid, and LookOut so that I can always use, restore, and find my phone even if the microSD card fails or is removed.) The disadvantage of Link2SD is that it doesn't create as much space as the Data2SD method. Both methods have a caveat in that the phone needs a certain amount of cache memory (which is in a different storage area of the phone) to support installed apps, regardless of whether those apps are in the phone's internal data partition or on a microSD-card data partition. Therefore your phone will likely run out of cache memory long before you fill up a large data-partition on a microSD card. For that reason, there's probably no reason to create an external data partition which is greater than 512MB (or maybe 1GB). I have not tried the Data2EXT method, but for my needs, the Link2SD method creates more than enough space to install every app that I want (about 30 of them, so far), no problem. (Prior to implementing Link2SD, I was constantly getting "low on storage space" notifications, which caused lots of problems, like not being able to receive text messages. Now I never have a problem.) I guess that most people will find that the Link2SD method solves all of their "low memory" issues, so I recommend it. Besides, if you implement Link2SD and run out of space, you can always implement Data2EXT to gain more space. Both methods have the common steps of giving your phone EXT4 file system capability and implementing an EXT4 partition on a fast microSD card, so it would be a small amount of incremental work to implement Data2EXT if you've already implemented Link2SD.


Disclaimers:
Installing a custom ROM will technically void your warranty (which I think is only like 30 days anyway). And installing a custom ROM could destroy your phone. But I think the chances of you having a problem are very small, and the results are very worthwhile. This stuff isn't hard to do if you just follow the instructions at the following links. And you can always restore a stock Sprint ROM if you really want to do so for some reason.

Instructions:
1) Buy a good, fast (Class 4 or faster) microSD card-- preferably a fairly big one since you'll use about 512MB to 1GB of it as internal memory, thereby decreasing the amount of memory on your microSD card for things like music, photos, videos, documents, etc. It is very likely that the stock card that came with your phone is too slow to use as "internal memory" (and perhaps too small anyway). There is information about speed grades and pictures of the speed grade logos here. If you don't see a speed grade "Class #" logo on your microSD card, then it's a slower speed card.

2) Install a custom ROM (if you haven't already done so). I posted step-by-step instructions for rooting and installing custom ROMs here.

3) To implement Link2SD or Data2EXT it's best to use the EXT4 file system. Your custom ROM may or may not support the EXT4 file system. If it doesn't support the EXT4 file system, you may need to download (onto the top level of your microSD card) and flash-install the appropriate zip file onto your custom ROM. (Depending on your custom recovery, typically you'll use the custom-recovery option that reads something like "Install zip file from SD card"). Following is list of solutions for some popular custom ROMs. Let me know if you know about solutions for other ROMS.
* Picasticks based ROMs like Reborn ROM & gROM: Download and flash the data2ext-V4-modified.zip.
* CM7 based ROMs like theKraven's CM7 flash the data2ext4-V4.zip.
* DanteROM & HydroROM have EXT4 built-in (as do, I think, other Hydrokernel-based ROMs) so no need to flash EXT4 support.
* OptiROM has DarkTremor's Apps2SD built-in so I think that there is no need to implement Link2SD.
* ICS based ROMs vary and some have the functionality built-in or can be harmed by "2SD" apps, so be careful and check with your ROM maker.

4) Copy everything on your microSD card to a folder on your PC or Mac so that you can move it back onto your (new Class 4 or higher) microSD card later.

5) On your fast microSD card, create two partions; an EXT4 file-system partition for your apps & app-data, and a FAT32 file-system partition for your photos, music, etc. (Your FAT32 partion will be accessible from your PC. Your EXT4 partition will only be accessible to your phone's operating system.) You may be able to partition your microSD card using the custom recovery on your phone (depending on your custom recovery) but I'm not going to cover that here because I think it's easier to use a free PC tool like Mini Tool Partition Wizard to partition and format your microSD card. There's a Mini Tool partitioning guide here. Per the cache-limitation caveat mentioned in the previous paragraph, a 512MB EXT4 partition should be more than big enough (especially for the Link2SD method because you'll also still have access to your phone's 160MB of internal memory for a total of 672MB). Anything more than 512MB would likely be unusable as a practical matter, but you could create a larger EXT4 partition (say 1GB) if you like.

6) Once you've created the two partitions, you should copy all the stuff from your old microSD card (from your PC/Mac) to the FAT32 partition of your new microSD card. Next you'll move your apps & app-data to your SD card's EXT4 partition using the Link2SD method or Data2SD method as explained below.

7) Install Link2SD (free) from the PlayStore in order to link (move) your apps to your microSD card. Once installed, give Link2SD Superuser "root" permission when it asks and tell it to link to your "EXT4" partition. You may need to restart the phone about twice. Then launch Link2SD and "link" your desired apps & data to your microSD's card's EXT4 partition. Note that you can even move relatively high performance media apps to the microSD card (like Sprint TV, YouTube, WinAmp, Pandora, etc.)

You're done! Enjoy!