Place the potatoes into a large pot and fill with enough water to cover. Bring to a boil, and cook until tender enough to pierce with a fork; drain, and and cut into cubes.
Melt cheese and 1/4 cup butter in a large saucepan over medium low heat, stirring frequently. Remove the pan from the heat; stir in the sour cream, onion, salt, and pepper. Stir the potatoes into the cheese mixture, and transfer to a 2 quart casserole dish. Dot the top of the potatoes with the remaining 2 tablespoons of butter, and sprinkle with paprika.
Bake in preheated oven until hot, about 30 minutes. Cool before serving.