In a small bowl, stir water and sugar until sugar is dissolved. Place peach, lemon juice and sugar mixture in a blender. Cover and process 1 minute or until blended. Transfer to a freezer container; cover and freeze 3 hours or until almost firm.
Transfer to blender. Cover and process 30-40 seconds or until slushy. Return to freezer container; cover and freeze overnight.
Remove from freezer just before serving. Using a fork, scrape into two dessert dishes.