LEGO in labs
Often in university mechanical and electrical engineering labs, LEGO elements are used to model systems. They allow complex mechanical systems to be rapidly prototyped, connected to microcontroller systems, and fitted with sensors and actuators. (note: Wikipedia:Fischertechnik is also popular for this purpose. Both companies sell to the educational market, LEGO via Dacta)
MIT Media Lab
At MIT, there is a lab completely devoted to prototyping and using LEGO elements, the Lego Learning Lab. This lab was responsible for the MindStorms project, which created the original Programmable Brick, the basis for the LEGO RCX.
Some funding for this effort was provided by The LEGO Company.
See also MindFest.