Combine the sugar and water in a small, heavy saucepan. Bring to a boil, brush down the sides of the pan with water and boil until caramelized, 5-6 minutes. The sugar will be fragrant and have a deep amber color when it is caramelized.
Remove the pan from the heat, slowly stir in the cream until smooth and let cool to room temperature.
Blend together the caramel, butter, salt and vanilla in a medium-size bowl.
This butter may be formed into a log and refrigerate until firm before slicing and serving.
How to Form into a Log: Transfer the flavored butter to a sheet of parchment paper, roll tightly into a 1 1/2-inch-thick log (a straight edge is helpful for forming an even log), and twist both ends of the parchment paper to seal. Slip the log into a paper towel tube if you want it to be perfectly round, and refrigerate until firm. To serve, cut slices of flavored butter with a warm knife (simply run hot water over the blade and then wipe it dry).