In uncovered 2-quart saucepan simmer sugar, water and cinnamon for 10 minutes. Strain; discard cinnamon pieces. Add coconut; cook, uncovered, about 5 minutes or until syrup is nearly absorbed, stirring frequently.
Stir in 2 1/2 cups of the milk; cook until mixture is hot. In bowl beat eggs with remaining 1/2 cup milk. Stir about 1 cup of the hot mixture into egg mixture; return to saucepan. Cook and stir until mixture thickens slightly but does not boil. Stir in vanilla.
Pour into a 1-1/2 quart bowl or individual serving dishes; chill.
Top with whipped cream and garnish with almonds, if desired.