In a saucepan, whisk together the sugar, water, cornstarch, and lemon juice. Bring to a boil over medium heat, stirring constantly, until thickened, about 2-3 minutes.
Remove from heat and stir in vanilla and peaches. Allow to cool.
Preheat the oven to 375F degrees. Line an 8x8 pan with parchment paper.
In a medium bowl, mix together flour, sugar, cinnamon, baking powder, and salt.
With a pastry cutter or two forks, cut in the butter until the pieces look like pebbles
then cut in the egg. Dough will be crumbly. Reserve 1/2 cup for the topping and pat the rest into the bottom of the pan.
In a large mixing bowl, beat together the cream cheese and sugar until smooth.
Add the egg and vanilla and beat until smooth.
Pour over the base layer.
Top with the peach filling then top with the reserved 1/2 cup of topping.
Bake 38-40 minutes or until the top is slightly brown and looks set when given a gentle shake.
Cool completely before cutting into 12 bars. To cut cleanly, use a very sharp knife and clean it using a paper towel between each cut.
Refrigerate leftovers for up to one week.