peel and dice potatoes to roughly 1/2 to 3/4 inch cubes. In a medium bowl, mix the sour cream, milk, bacon, 1/2 cup cheddar, chives, salt and pepper. Fold in the potatoes until well coated. Put in a 8 inch square baking dish.
In another bowl, mix the bread crumbs, melted butter and remaining cheddar cheese. Sprinkle on top of the potatoes. Put uncovered in the center rack of the oven and bake at 325° for 35 minutes.