The classic way to make a caramel sauce is to cook approx (this is what we use at the restaurant, because sometimes we get distracted and have to run away; it's more forgiving. Use less water if you can concentrate) 4:1 sugar:water until the sugar has taken a golden colour. Remove from heat, whisk in cream and butter until you reach your desired consistency, add a pinch or two of salt, just enough so you can taste it. This will get you a nice caramel sauce, keeps a week or so at room temp.
Edited to respond to question:
Honestly, I have no idea what the ideal ratio is. I just do it by feel. There should be a zillion caramel recipes available via google that can be more specific. Offhand I would kind of sort of guess that for three cups sugar I use roughly 3/4c cream and 3tbsp butter. Ish.
Edited to provide another answer:
If you wish to use condensed milk to create something that will be closer to a dulce de leche, do the following. This can be extremely dangerous, please be sure to follow all directions. I am not responsible if you injure yourself:
Fill a large pot with water. Keep another pot boiling for topping off the main pot as water evaporates.
Place a can of condensed milk, still sealed, label removed, into the main pot. Bring up to a hard rolling boil. Top up the water as needed. Ensure that the can is always covered with at least six inches of water. Keep a lid on the pot, just in case.
Boil hard for four hours. Turn off the heat, and allow the water in the pot to come slowly down to room temperature. Do not at this point touch the can.
After cooling, let the pot continue to sit at room temperature for at least one hour. At this point, reach into the pot and gently touch the can with your hand. If it is still warm, leave it to cool further.
Once the can is completely cooled to room temperature, you may open it. If you want to be sure, leave it overnight.
You will have a glorious caramel sauce.
Note: I have intentionally described this process with significant margin for error for safety. There will be significant pressure inside the can, and opening it prematurely can very easily result in life-altering injuries.
Whipped vegetable shortening with powdered sugar. I can make it up a week in advance, probably even longer, and keep it in an airtight container in a cool place. And it has the advantage that it's pure white (if you use imitation vanilla extract, or lemon extract), so you can get vibrant colors on whatever you're decorating.
If you make too much, you can then make flowers and let them dry out, then store those for a year or more.
Here's the recipe I use, that I got from Jane who taught two of the cake decorating classes I took:
4 lb powdered sugar
1 TB cream of tartar
1 1/4 c. of white shortening (crisco ... the sticks are easy to measure)
a pinch of salt
1 TB extract of your choice
3/4 to 1c. of water (maybe more depending on humidity)
Put all ingredients except the water into a mixer. Add 3/4 c. water, and slowly add more to make the consistancy of your choice. Mix on low speed 'til mixed, then on #6 or 8 for 6 to 7 minutes. Consistency should be "creamy" -- like cream cheese when soft. Stiff icing should be creamy also.
Best Answer
There are several options for frostings that are light and fluffy, and not based on just powdered (confectioner's) sugar and shortening, that aren't just whipped cream. Other answers have already mentioned the last two, but I wanted to add whipped ganache.
whipped ganache--my personal favorite. Of course, this is always and only chocolate (I don't call white chocolate chocolate...)
French buttercream; the link is for a vanilla recipe but many variants are possible.
Seven minute frosting is tall and fluffy and has no fat at all. This is also known as merengue frosting.