In a large saucepan, saute onion in butter until tender. Stir in the flour, salt and nutmeg until blended. Gradually whisk in milk and water. Bring to a boil. Cook and stir for 2 minutes or until thickened. Reduce heat to medium; add the cheese and stir until melted. Stir in the spinach; heat through. Serve with oyster crackers if desired.