To make Caramel: Heat sugar and 2 Tbs. water in saucepan over low heat until water simmers. Remove, and swirl pan until sugar dissolves.
Cover pan, and boil over medium-high heat. When syrup’s surface is thick with bubbles, uncover, and continue to boil and swirl. When syrup is golden, remove, and keep swirling as it darkens. Pour 1/6 of syrup into each custard cup; swirl to coat bottoms.
Preheat oven to 350F. Boil several cups of water for roasting pan.
To make Coconut Flan: Blend milks and vanilla. Whisk in eggs; stir in coconut. Pour into custard cups, and set in large roasting pan. Pour 1 inch of boiling water into pan.
Bake about 40 minutes; leave cups in pan 20 minutes. Refrigerate at least 4 hours.