In a small saucepan, heat water and the butterscotch-flavored pieces together until the pieces are just melted. Cool for about 10 minutes. Grease and flour two inch round baking pans. Set the pans aside.
In a large bowl, combine cake mix, eggs, oil, cinnamon, and butterscotch mixture. Beat with electric mixer, as directed for cake mix. Pour batter into prepared pans.
Bake in a 350 degree F oven for about 25 minutes for 9-inch layers or 35 minutes for 8-inch layers or until a toothpick inserted near centers comes out clean. Cool on wire racks for 10 minutes. Remove cakes from pans. Cool completely on wire racks before frosting.
Place 1 cake layer on a serving plate. Spread top with some of the Butterscotch Frosting. Place second layer on top. Spread side and top of cake with frosting. Store in refrigerator.