1Preheat oven to 350°F. Line 24 muffin cups with paper liners.
2In a large bowl, sift together the cake flour, baking powder, baking soda, salt and a pinch of nutmeg.
3Cream together the butter, granulated sugar and brown sugar then add in half of the eggs. Continue creaming the mixture and then add in the second half of the eggs, scraping down the bowl. Add the vanilla and then the sour cream.
4Stir the dry ingredients into the wet and then gently fold in the diced peaches.
5Scoop the batter into the prepared muffin tins and bake for 18-22 minutes until a toothpick comes out clean.
6Allow the cupcakes to cool in the muffin tins for five minutes, then transfer them to a wire rack and allow them to completely cool while you make the frosting.
7Beat together the cream cheese and softened butter until well incorporated.
8Beat in the vanilla then slowly beat in the powdered sugar until the icing is smooth in texture. Spread on cooled cupcakes and top with diced peaches (optional).