To make this like the true New Orleans favorite you can add a bourbon sauce like they do in the French Quarter. Its also great with a lemon sauce or any other sweet topping of your choice.
Cut the bread into cubes and place in a 13 x 9 x 2-1/2 inch rectangular baking dish. Set aside. Whip the eggs and milk together. Add 1/2 teaspoon nutmeg, vanilla extract and sugar to the egg mixture and set aside.
Dice the peaches and place them, along with the raisins, between the bread cubes, being careful to push them down deep or the raisins will burn. Pour the egg mixture over the casserole of bread, raisins, and peaches. The pan will be very full, but the pudding cooks down. Place butter bits on top and sprinkle with the second 1/2 teaspoon of nutmeg. Bake at 375 degrees until brown, between 40 and 60 minutes. Serve warm, topped off, if you like, with whipped cream or vanilla ice cream. Makes 12 servings.