In a saucepan, combine sugar and water over medium heat. Stir until sugar dissolves, then stop stirring and let it boil until it turns a golden brown color.

Quickly pour the caramel into a baking dish, tilting to coat the bottom evenly. Set aside to cool and harden.

In a blender, combine softened cream cheese, sweetened condensed milk, evaporated milk, eggs, and vanilla extract. Blend until smooth and well combined.

Pour the flan mixture over the hardened caramel in the baking dish.

Place the baking dish in a larger baking pan filled with hot water (water bath) and bake in a preheated oven at 350?F (175?C) for about 60 minutes, or until set.

Remove from the oven and let it cool to room temperature, then refrigerate for at least 4 hours or overnight.

To serve, run a knife around the edges of the flan, then invert onto a serving plate. The caramel will flow over the top.