Heat oven to 350°F. In medium saucepan, combine sugar and water; mix well. With pastry brush dipped in water, brush any sugar off sides of saucepan. Without stirring, cook over medium-high heat for 5 to 6 minutes or until mixture begins to turn amber in color. Gently swirl pan as mixture darkens to golden brown. (Watch carefully as mixture can burn in seconds.) Immediately remove from heat. Carefully pour and swirl caramel in bottom of ungreased 10-inch deep-dish glass pie pan.
In large bowl, beat cream cheese until smooth. Add condensed milk, milk, reserved 1/4 cup pineapple liquid, vanilla and eggs; mix well. Stir in pineapple. Pour over caramel in pie pan.
Place pie pan in shallow pan such as broiler pan. Pour hot water into shallow pan about halfway up sides of pie pan.
Bake at 350°F. for 30 to 35 minutes or until knife inserted in center comes out clean. Cool 30 minutes. Refrigerate at least 2 hours or until completely chilled.
To serve, carefully run knife around sides of flan. Place bottom of pan in warm water for 30 to 60 seconds to loosen flan. Carefully invert flan onto serving plate. To serve, cut into wedges.