Hi, I'm trying to figure out the difference between the i5 and i7 laptops, this is my first even time buying a laptop, I always have used desktops that I have built. I'm not sure how hyperthreading is on the i5 or i7 if the i5 even has it or not, someone told me the i5 works like a i3 for desktop just more powerful. I have 16 gigs of sodimm memory ready to be installed, I do security work so I run a lot of vm's at once for my linux and windows 7/servers. My boss said they would pay the full price of it up to $500 but if the i7 is way better I might add another $200 of my own. The only thing I don't have to much use for is a strong video card, I use some gpu based stuff, but I've noticed laptops normally lack at that so I just use my desktop for that.
The i5 is more closely related to the i7 than to the i3. i5 CPUs generally have four cores ( But some models vary) with no hyperthreading but a high instructions per second count. The i7's generally have four cores plus hyperthreading, effectively making it an 8 core cpu. The i7 performs much better in cpu intensive operations like rendering and computational applications. Both or either would likely be fine for what you need but the i7 will be the stronger performer in virtual machine use.
I would recommend pairing it with as much RAM as is allowable, up to 16GB. It's doubtful you would need more than that in most cases, although there may be some exceptions. My advice would be, since it's not for gaming, get an i7 model that only has the integrated graphics, which should significantly reduce the overall price of the unit, since it sounds like you don't need anything beyond that. The integrated graphics can run HD video and play light games as well as is needed for most usage.