In batters, one teaspoon of vanilla extract substitutes for a packet of vanilla sugar, but as a topping, plain sugar is an acceptable substitute. It depends on what the recipe requires the sugar for.
Make vanilla sugar by storing a split vanilla bean in an airtight container with 2 pounds of sugar for several weeks. Shake the container occasionally to mix the flavor of the beans with the sugar. Vanilla sugar does not impart the color of vanilla extract in the recipe. As a topping, it adds a hint of vanilla flavor not found in ordinary sugar. This ingredient is common in many German dessert recipes.