The Hubble Telescope uses internal gyros to adjust the direction that it is facing. The camera and the lens adjust the field of view and the distance of the focus.
The gyros inside the Hubble Telescope are spinning at a high rate of speed, they are kept spinning by motors, thus creating a lot of angular momentum. We can't convert angular momentum into horizontal momentum (spindizzy space drive), but we can transfer that momentum to create angular momentum into something else.
By Newton’s laws of motion a quickly spinning small object can transmit its energy to slowly move a big object. Once the gyroscopes do that they need to be spun up again. The gyros stores the energy generated by the electric motors as rotational energy. With a gyroscope in a vacuum, spinning on a diamond point then it will keep it's energy for a long time; it is rotating in a very low friction environment. When the motors are put into contact with the gyros, but locked so they can't spin the spinning energy is then transmitted to the rest of the Space Telescope.
When the operators, at the Jet Propulsion Center, want to rotate the Hubble Telescope they spin up the gyros with electric motors, then transfer that to the telescope itself. The movment is very small, which is what the astronomers want. If they want to make a big turn, then need to use the gyros several times. Hubble has three gyroscopes on the up-down axis, and three gyroscopes on the port-starboard axis (NASA likes triple redundancy). Four of those gyroscopes are not working anymore.
An internal motor can swing a small telescope, as long as it is mounted on a large object. In this case the momentum generated by swinging the small telescope is transferred to the large object where it will have less effect, it may not even have enough effect to over power the objects inertia and so the large object remains in place. This is the opposite of what happens in the Hubble Space Telescope.
You are correct that it would be futile to try and spin a large object with a small motor more energy is required. According to Newton’s Laws objects at rest tend to stay at rest, so you have to overcome inertia to get an object moving. A motor doesn’t have enough energy to do that. It takes a gyroscope with more energy imparted to it to overcome the inertia. If the Hubble Telescope used motors to turn itself then these motors would just turn slowly until they burned out. The movement that they would impart would be very small. A gyroscope is repeatedly spun up to faster and faster speeds. Its large energy is stored, ready to transmit it to the telescope.
The rockets on the Hubble are only used for position keeping and gross movement. Their fuel is limited so they can't do this often. The gyros are powered by electric motors using the power generated, by the sun, inside the solar cells. To keep this power flow even, and to insure that there is enough power to operate things like the gyroscopes batteries are used.
When an astronaut uses an electric screwdriver in space the small motor creates a high angular momentum. The station is too large (has too much inertia) to be turned with the screwdriver so it spins the astronaut. Special gearing and balancing, inside the screwdriver, is needed to prevent this. If the astronaut tries to spin the screwdriver by hand then they are doing the same thing. The resistance to the screw caused by the hull of the space station is strong enough to send the rotational energy right back into the astronaut. The astronaut doesn’t have the ability to brace against the earth and use its inertia to stop them from rotating. If the astronaut is in a braced position then they can use the inertia of the Space Station to prevent them from rotating, but this isn’t always a good position to work from. The Hubble has a lot less mass and the gyros are positioned to work on one axis so it uses the energy more efficiently. Moving the space station with gyros would be very difficult, they would have to be spun up to a very high speed and would require the action of the on board rocket jets to overcome the station’s inertia.
Currently only 2 of 6 gyroscopes are working, and re-pointing the Hubble Telescope is hard, large movements are impossible. The batteries are also dieing and the on board rocket fuel is running low. If the Hubble Telescope isn't refurbished soon then it will become a useless piece of space junk.
After the Columbia disaster NASA canceled any plans to service the Hubble, but thanks to public opinion and the work of the astronomer community a new Hubble service mission is planned for 2008.
Ion thrusters have been only used on one spacecraft to date. The ion engine provides very little thrust, but it takes very little fuel and uses freely gained electricity so it can keep accelerating over a long distance. To get the spacecraft moving in the first place a high power source, like a rocket, or the rotational energy of the Earth is required. Once the craft is moving then, as per Newton's Laws the spacecraft will want to continue moving an a little energy can make it accelerate.
If ion thrusters were added to the Space Telescope, and I don’t know of any plans to do it, then they would be used to keep the telescope in orbit, not to rotate it. At the distance it is orbiting the pull of the Earth is minor, but it is constant. The best way to counteract the pull of gravity is to use a low thrust engine running for a long period of time—which is an ideal job for an ion engine. The Hubble Space Telescope is in a higher orbit than the International Space Station, so ion thrusters would work there as well.
The Hubble Space Telescope is long past its expected service live, but then the two Mars probes Opportunity and Spirit have survived 90X their expected lifespan. The scientists love this and are doing some great science with it. The same is true with the Hubble. It's replacement is not planned to be set up until 2010, which is subject to setbacks, so the longer that we are able to keep it in operation, the better.