Heat oven to 400°F. In 4-quart saucepan, heat 1/4 cup butter, 1/2 cup sugar and the cornstarch over medium heat 1 minute, stirring constantly, until butter is melted. Stir in 2 teaspoons cinnamon, the nutmeg, vanilla, lemon extract and peaches with reserved syrup. Heat to boiling; boil 1 minute, stirring occasionally. Pour into ungreased 13x9-inch (3-quart) glass baking dish.