Angelyn, we have a fully functioning test environment here in Lenexa, including a separate SQL instance, application/web server, SDE geodatabase, and a pool of VM desktops.
Setup is fairly straight forward. For us a "Non-production" license works well with our test configuration, however we have run into an issue before where there is some limited logging available with a non-production license. The pro's (mainly the unlimited seats for each module we own) far outweigh the con's we've found.
If you've got specific questions or concerns, I'd be happy to do my best to answer how we've addressed it here.