The interest in virtualization has been growing rapidly in the IT industry because of inherent benefits like better resource utilization and ease of system manageability. The experimentation and use of virtualization as well as the simultaneous deployment of virtual software are increasingly getting popular and in use by educational institutions for research and teaching. This paper stresses on the potential advantages associated with virtualization and the use of virtual machines for scenarios, which cannot be easily implemented and/or studied in a traditional academic network environment, but need to be explored and experimented by students to meet the raising needs and knowledge-base demanded by the IT industry. In this context, we discuss various aspects of virtualization - starting from the working principle of virtual machines, installation procedure for a virtual guest operating system on a physical host operating system, virtualization options and a performance study measuring the throughput obtained on a network of virtual machines and physical host machines. In addition, the paper extensively evaluates the use of virtual machines and virtual networks in an academic environment and also specifically discusses sample projects on network security, which may not be feasible enough to be conducted in a physical network of personal computers; but could be conducted only using virtual machines.