In a large bowl, combine the flour, sugar, baking powder, salt and cinnamon. Stir in the milk just until combined; fold in peaches. Spread into a greased 8-in. square baking dish.
In a large saucepan, combine the water, sugars, butter and nutmeg. Bring to a boil, stirring until sugars are dissolved. Pour over top. Bake at 400° for 40-50 minutes or until filling is bubbly and a toothpick inserted in topping comes out clean.
Serve warm or cold with cream.