Below is a quote from gutbucket here on gearslutz regarding Olympus LS-10. I'm not sure if he's referring to internal mics or not.
"Stay away from the Olympus if you intend to use it for music. Very hissy and absolutely thin sounding.
Plus its price of $399.00 is ridiculous. If it was priced for $199.00, then it would be different. Engineered for doing interviews (ENG), capturing lectures, board meetings and such. Capitalizing on their wildly popular cassette handheld recorders, Olympus is using its "name brand" recognition to draw in buyers. So Buyer Beware.
The Olympus LS-10 is the weakest sounding in its market, IMO. Makes the Zoom H2 sound like a baby SD 722 at twice the price. Yikes!"