Here's an interesting article on Edutopia.org that shows how virtual worlds can provide "a shared online universe in which students can play to learn": Get a Life: Students Collaborate in Simulated Roles,
It mentions Whyville, "a Web-based virtual world that provides inquiry-based education for middle school students" and some of the projects that schools have done using it, as well as looking at some of the benefits and (ahem) "challenges".
Whyville isn't Second Life — it's not so sophisticated, as you can see from the avatar I was starting to create (above right) — or Teen Second Life, but it's simplicity might just appeal to kids, if you're teaching them.
Edutopia [about] (the cynic in me loves that name! .-) provides "Information and Inspiration for Innovative Teaching in K12 Schools".