Between trips to the dance floor and orders of beer, two sailors Saturday night discussed what should happen to a Navy seaman and two retired Navy officers if they are convicted of spying for the Soviet Union.

"The man ought to be taken out and shot," said the first sailor. "All three of them."

"Not shot, man," returned the second sailor, who was arguing for life imprisonment. "Not shot. Give them time to think about what they did."

"Shot," said the first, holding his finger to his forehead like a pistol.

The debate is admittedly academic. But for many of the thousands of sailors in the Norfolk area these days, it serves to let off some steam over the alleged betrayal of Navy secrets to the Soviet Union by retired Navy officer John A. Walker Jr., his brother Arthur Walker and John Walker's son, seaman Michael Walker. Story on Walkers, other spy cases, Page A20 .

The case, described by federal authorities as one of the biggest in Navy history, has made them feel newly vulnerable and they are angry about it. As one sailor put it, "They say, hang him, kill him."

As some sailors see it, if the charges are true, the Walkers were playing with the lives of thousands of sailors, particularly those who served with Michael Walker on the aircraft carrier USS Nimitz.

John Telford, a 32-year-old Navy man who has spent his 10 years in the service largely at sea, sat at Michael's, a popular nightclub frequented by Navy employes in Virginia Beach, and talked about his fears of the Soviets and the crimes the Walkers are alleged to have committed.

"This dude," he says of the young seaman, "was in communications; he could have cost somebody's life."

"All I can say is he's lucky he got off of the ship alive," said a 25-year-old supply officer, drinking beer at a table across the bar from Telford.

Beyond the outrage over a broken trust in a profession where relying on coworkers can be a matter of life and death, the case has bequeathed a new anxiety to Navy men about the security procedures that are supposed to protect them.

"We were on board last week with about 50 Marine Corps lieutenants, just commissioned," said Steve Thorne, 19, who is a midshipman at the Naval Academy in Annapolis and undergoing training in Virginia Beach. "They couldn't believe that something like that could slip through."

The Norfolk area, with 10 major military installations, is a prime target for Soviet espionage efforts, according to FBI officials.

FBI spokesman Dave Divan said that while it's difficult to rank targets, "The Hampton Roads area is very important to those concerned with gathering intelligence" on U.S. forces.

The Navy here employs more than 100,000 military personnel and 40,000 civilians, according to Lt. Jill Mathews, assistant public affairs officer for the Norfolk Naval Base, the largest in the free world. Including the employes' families, retired personnel and the reservists, the Navy is tied to almost 300,000 people here, she said.

Since he heard about the Walker case, these statistics have a new meaning to Paul, 20, who enlisted in the Navy four months ago and declined to give his last name. "I just wonder how many spies are living right here," he said. "Probably a lot."

"It makes you wonder: who can you trust," agreed Michael Dombrowski, an enlisted man working in a Naval medical clinic at the Oceana Naval Air Station, who spent this afternoon sunning himself on his bedspread on the beach.

The sense of betrayal that sailors express is shared on a more personal level by some civilians who knew John Walker, the main figure in the alleged spy operation. The more information that comes out about the case, the more they feel deceived by a man who, the FBI alleges, carried on a double life for as along as 18 years.

Gerald Stuteville, a salesman at the Ocean View Radio Shack store, said he sold John Walker hundreds of dollars worth of surveillance equipment for Walker's private detective firm.

He said Walker won him over with his friendly manner and before long, he was showing Walker how to hide microphones in pagers and other electronic tricks. "I feel like I've been used," said Stuteville.

Ted Ulrich, who worked with Walker at two detective firms and considered him a friend, has the same feeling of being wronged. "Here I offered friendship . . . ," Ulrich said. "I think he had me snowballed."