Make sure the sugar is completely dissolved in the water before the mixture boils; stray granules will turn your caramel gritty.
The mixture will thicken and change color as it cooks. Remove the caramel from the heat when it is just light amber; it will darken as it cools.
Heavy cream makes the caramel soft and sticky, rather than brittle. Be careful: The cream will bubble and splatter when you add it to the hot caramel.