In a medium saucepan, add the sugar and water. Heat over medium-heat, whisking occasionally, as it is brought to a boil. Remove from heat and cool to room temperature. Stir in vanilla extract. Store in a covered container, and keep refrigerated. You will be able to make about 10 vanilla lattes with this recipe for vanilla syrup.
MAKE THE ICED LATTE:
Add ice cubes to a tall glass.
Pour the hot espresso and vanilla syrup on top of the ice and stir. The ice will melt a bit, which is what you want to happen to help dilute the espresso.