Add water to a very small saucepan and sprinkle gelatin over the water. Let it stand for about 1 minute to soften. Heat the gelatin mixture over very low heat until the gelatin is dissolved and remove it from the heat.
In a large saucepan using moderately high heat, bring the cream, half and half, and sugar just to a boil stirring constantly. Remove the pan from the heat and stir in the gelatin mixture and vanilla. Divide the cream mixture among eight 1/2-cup ramekins and cool to room temperature. Cover the ramekins and chill for at least 4 hours or overnight.
Serve in the ramekins or if you prefer, turn out the Panna Cotta onto individual plates. To do this, dip the ramekins, 1 at a time, into a bowl of hot water for 3 seconds. Then run a thin knife around the edge of each ramekin and invert the ramekin onto the center of a small plate tapping the bottom of the dish to help release the Panna Cotta.