Combine sugar, cinnamon, evaporated milk and water in a 2-qt. heavy saucepan. Place over medium or medium-low heat and cook to the soft ball stage (236 to 238°), stirring constantly to prevent curdling.
Remove from heat; mix in nuts and vanilla. Let stand 15 minutes, then stir with a wooden spoon until mixture thickens. Pour at once onto waxed paper-lined baking