Preheat oven to 350°F (175°C). Grease and flour two 8-inch round cake pans.
In a medium saucepan, heat sugar over medium heat, stirring constantly until it melts and turns a deep amber color. Remove from heat and carefully add ½ cup of water. Stir until smooth. Let cool.
In a large bowl, cream butter and sugar until light and fluffy. Beat in eggs one at a time, then stir in vanilla.
In another bowl, whisk together flour, baking powder, baking soda, and salt. Add to the butter mixture alternately with buttermilk, beginning and ending with the flour mixture. Stir in the caramel sauce.
Divide batter evenly between the prepared pans. Bake for 25-30 minutes, or until a toothpick inserted into the center comes out clean. Cool in pans for 10 minutes, then turn out onto wire racks to cool completely.