PREHEAT oven to 350°F. Lightly grease and flour 12-cup fluted tube pan or 10-inch tube pan. Set aside. Place cake mix, dry pudding mix, flavored coffee, eggs, 1 cup of the sour cream, the oil and 1/2 cup of the water in large bowl. Beat with electric mixer on low speed 2 min. or just until dry ingredients are moistened, stopping occasionally to scrape down side of bowl. Beat on medium speed 2 min. or until well blended. Remove 1 cup of the batter; place in small bowl. Pour remaining batter into prepared pan.
MICROWAVE 25 of the caramels and 3 tsp. (1 Tbsp.) of the remaining water in medium microwaveable bowl on HIGH 30 sec.; stir. Continue microwaving 1 min. until caramels are completely melted, stirring every 10 sec. Add reserved 1 cup batter and 1/4 cup of the remaining sour cream; mix well. Drop by spoonfuls over batter in pan; swirl with knife several times for marble effect.
BAKE 1 hour or until wooden toothpick inserted near center comes out clean. Cool in pan on wire rack 10 min. Loosen cake from side of pan with spatula or knife. Invert cake onto rack; carefully remove pan. Cool cake completely.
PLACE remaining 8 caramels in medium microwaveable bowl. Add remaining 1 tsp. water. Microwave 20 sec.; stir. Continue microwaving 30 sec. until caramels are completely melted, stirring every 10 sec. Stir in remaining 1/4 cup sour cream and the powdered sugar until well blended. Cool. Drizzle over cake. Store in refrigerator.