In a medium saucepan, combine sugar and water. Use a vegetable peeler to remove long thin strips of peel (green part only) from half of the lime. Add lime peel to sugar mixture; reserve lime for another use. Split vanilla bean, if using, in half lengthwise and scrape out seeds with back of knife. Add pod and seeds to sugar mixture. Bring to a boil over medium-high heat, stirring until sugar is dissolved. Remove from heat and let syrup stand for 10 minutes. Discard lime peel and vanilla pod. Stir in vanilla, if using. Place papaya in a medium bowl. Pour syrup over papaya. Cover and chill at least 4 hours and up to 2 days. Makes 6 servings.