Sprinkle hazelnuts in bottoms of eight 6-oz. custard cups.
Heat granulated sugar and the water in heavy medium saucepan over medium-high heat to boiling. (You may need to brush the side of the pan with cold water to keep the sugar from crystallizing.) Boil, without stirring but watching carefully, until amber in color. Immediately pour over the hazelnuts.
Heat the milk in a small saucepan until scalded. Whisk remaining ingredients in mixing bowl until completely blended. Gradually whisk in milk and pour over caramel in cups. Place custard cups in a large baking pan and pour hot water into the pan until it comes halfway up the sides of the cups.
Bake until the custards are set but centers are still slightly wobbly, about 35-40 minutes. Remove cups from water bath and let cool to room temperature. Refrigerate at least 6 hours overnight.
To serve, invert each cup onto a dessert plate, then seve at once.