How to Install Android 2.3 Gingerbread Cyanogenmod 7 on LG Optimus One P500
Download the Android 2.3 Gingerbread CM7 ROM for LG Optimus One. Here are two download links for that
Download Android 2.3 Gingerbread Cyanogenmod 7 ROM for LG Optimus One - Download 1 | Download 2
Connect your phone to your PC and copy the ROM to the root of your SD card.
Download flash_image.zip and a recovery image for the Optimus One from Android Forums.
Copy the flash_image and the recovery image to the root of your SD card too.
Follow that tutorial on Android Forums to boot into recovery mode on your Optimus One.
Remember to take a backup of the existing ROM using the Backup option.
Once you have booted into recovery mode, select the Flash ZIP from SD Card option and select the Android 2.3 Gingerbread ROM. Flash it on your LG Optimus One.
In a few minutes, your LG Optimus One will reboot and it will be running Android 2.3 Gingerbread Cyanogenmod 7.
If the flashing doesn't work, you can restore to the earlier backup.
Note: This ROM is an experimental one, so use it at your own risk. If you can wait, wait for the official Android 2.3 upgrade, it will be much safer. For any doubts and queries, hit the official XDA thread.
Sources and References: XDA, Android Forums