With the appearance of massively parallel and inexpensive platforms such as the G80 generation of NVIDIA GPUs, more real-life applications will be designed or ported to these platforms. This requires structured transformation methods that remove existing application bottlenecks in these platforms. Balancing the usage of on-chip resources, used for improving the application performance, in these platforms is often non-intuitive and some applications will run into resource limits. In this paper, we present a memory optimization technique for the software-managed scratchpad memory in the G80 architecture to alleviate the constraints of using the scratchpad memory. We propose a memory optimization scheme that minimizes the usage of memory space by discovering the chances of memory reuse with the goal of maximizing the application performance. Our solution is based on graph coloring. We evaluated our memory optimization scheme by a set of experiments on an image processing benchmark suite in medical imaging domain using NVIDIA Quadro FX 5600 and CUDA. Implementations based on our proposed memory optimization scheme showed up to 37% decrease in execution time comparing to their naïve GPU implementations.