In a large saucepan, bring water and sugar to a boil. Cook, uncovered, for 5 minutes. Cool. Stir in 2 cups coconut and vanilla. In a small bowl, beat cream until soft peaks form; fold into coconut mixture. Pour into serving dishes. Cover and freeze overnight.
Remove from the freezer 45 minutes before serving. Toast the remaining coconut; sprinkle over dessert. Top with macadamia nuts.