Where have you seen them described as 1MB? AFAIK the VMU holds 128KB
(there's really 256 blocks, but you can only use 200. The rest are there in
case part of the flash chip in the VMU gets damaged). There are special
utilities that can format your VMU to use all 256 blocks, but it's probably
not recommended.

Now, there are cards that have more than one bank. Sega made a 4x card, and
I have a generic 2x card here. They're basically 4 VMUs in one, and you can
switch between which one you're using. Noone knows why they chose to do it
that way, instead of making VMUs with more storage, because the Dreamcast
itself can (supposedly) handle VMUs larger than 200 blocks. Perhaps there
was a problem with the first set of dev. kits or something and they didn't
want to break older games, or perhaps it was a battery or price issue? I
guess it's just one of the Dreamcast mysteries, like why the controllers
only have room for 2 devices, yet the Dreamcast hardware/software itself can
support 6 ;)

-Sam