In a 1-1/2-qt. baking dish, combine peaches, sugar, tapioca and lemon juice. Sprinkle blueberries over top. Sprinkle with nutmeg; set aside.
For dumplings, combine first five ingredients in bowl; cut in butter with a pastry blender until mixture resembles cornmeal. Add cream or milk; stir until dough is mixed and moistened. Drop by tablespoonfuls over fruit mixture. Sprinkle nutmeg over dumplings.
Bake at 400° for 25-30 minutes or until top is golden brown. Serve warm with ice cream if desired.