Rudolf Boogerman from Miracle Tutorials has created a couple of how to guides on how to configure PrettyMay to record Skype calls. The first takes you through the set up process and shows you how to record each speaker as a separate track allowing you to edit each one independently and then mix them together in Audacity to create a stereo effect.
In the second tutorial, Rudolf demonstrates how to record a call to a landline and then to another Skype user and compares the audio quality of the two.
Now there are free tools for recording Skype conversations such as CallGraph or MP3 Skype recorder, but the advantage of paying for a tool such as PrettyMay or Pamela is you can configure it to record speakers as separate tracks. This definitely helps for producing great sounding podcasts, but is not essential if all you want to do is to help pupils practice their speaking and listening skills in lessons. The free version of Pamela lets you to record up to 15 minutes of audio and each track is mixed together automatically which is fine for basic classroom use.
For a comprehensive overview of how to set up, record Skype with Pamela and configure privacy settings, check out these tutorials by Nik Peachey which guide you through the straightforward process. Oh and don't forget too if you are going to record someone to always ask permission first.