How do I disable the fancy graphic effects?

If you want something lightweight for VM usage, you may want to use Lubuntu. It basically is the LXDE/Openbox GUI environment but with the Ubuntu backend, so you can do all the stuff you'd normally do in Ubuntu, but without half of the resource sink.

To install Lubuntu into your Ubuntu:

sudo apt-get install lubuntu-desktop

If you want something a little more prettier, you may wish to try Xubuntu, although that even may a bit too "heavy" in terms of memory usage when compared to Lubuntu/LXDE. Also, it comes with a ton of extra packages to replace the default GNOME offerings, so if you want to replace things like image viewers, for example, then Xubuntu is the best offering one can get. If you just need to run scripts into a terminal and a few minor file management things, Lubuntu is the better offering.

To install Xubuntu into your Ubuntu:

sudo apt-get install xubuntu-desktop

And of course, if you want to be even more lightweight, consider installing fluxbox or downloading a Fluxbox distro.

To install Fluxbox into your Ubuntu:

sudo apt-get install fluxbox openbox

Remember, Fluxbox does require a bit of setting up in order to use it. The menu is highly customizable, but by default doesn't come with all the options that the GNOME environment does. Again, if all you need to do is solely run the terminal for whatever commands, Fluxbox is a brilliant alternative.

You might consider using a no-frills desktop environment, i.e., XFCE or something more minimal.

Also take note of the so-called "JeOS" distributions, delivered just enough Operating System for a virtual machine, e.g. Ubuntu JeOS (official site).

Edit: Apparently, there's a also the "Unity 2D"-option but I can't find anything useful on this; not sure if its still supported by Ubuntu.