Most antivirus/security firms have a similar kind of network where they analyze samples. It's detached from the internet to avoid spreading the infections, but they usually have mechanisms to emulate being online, etc.

This XKCD is a likening of the very established notion of a honeynet with an acquarium. If you want to set one up there are good open source tools available, but you will want to be quite careful to comprehend what you are doing. See https://en.wikipedia.org/wiki/Honeypot_%28computing%29

http://www.brianlinkletter.com/open-source-network-simulator... ?

It kind of depends on the systems (you can run a number of 640K DOS boxes in a simulator though :-) and virii of this period tended to make the boxes break so it wasn't really something that a flock would keep going.

Someone did try (I believe it was called wecanhasthetechnology or something), but it didn't last long.