In large saucepan over medium heat, combine peaches, water, 1 1/2 cups sugar and cornstarch. Cook, stirring constantly, until mixture boils. Boil for one minute, then reduce heat to low to keep warm.
In a large bowl, stir together baking mix, 2 tablespoons sugar, melted margarine and milk to form a soft dough. Remove to floured surface and knead 8 to 10 times. Roll out into a 9 inch square.
Spread softened margarine over dough. Combine 1/4 cup sugar with cinnamon, and sprinkle mixture over dough. Roll dough into a log shape and cut into 6 - 1 1/2 inch slices. Pour hot peach mixture into an 8x8 inch baking dish. Place roll slices, cut side up, on top of peach mixture.
Bake in preheated oven 20 to 25 minutes, until puffed and golden. Serve warm.