In a heavy 8" skillet caramelize 1/3 cup sugar by heating and stirring over medium heat until it is melted and golden brown in color. Quickly pour into an 8" round straight sided baking dish so that the mixture covers the entire bottom of the dish. This will harden slightly. Set aside.
In a blender, pour the evaporated milk, condensed milk, egg yolks, vanilla and 1/2 cup sugar. Blend for 1 minute. Pour this mixture into the caramel coated baking dish. Set this dish into a larger pan that is filled with boiling water to a depth of 1 inch or at least half way up the side of the flan baking dish. Bake in a 325 degree oven for 45 minutes or until knife inserted halfway between center and edge comes out clean. Center may be slightly soft. Chill the flan overnight. Carefully loosen sides with sharp knife run around the edge of the flan and the dish. Cover dish with a chilled platter and invert. Lift the baking dish slightly for a couple of minutes so that all the caramel will trickle over the top and sides.