We shouldn't be sad that such a stylish LG has such low specs, as LG always releases exotic designs. We should rather notice that this is a music device intended for the low-cost market.

With a 2" QVGA display and a 2 megapixel camera, the KM500 is clearly not a strong imaging phone, but we can tell that it's music orientated by the dedicated music key and the 3.5mm jack.

There is no 3G, and Bluetooth is v2.0, which should have A2DP to enable good music quality in bluetooth headphones.
There is 50MB of internal memory, and the KM500 supports microSD if you need further space.