BEAT cream cheese and 1/2 cup of the milk in large bowl with electric mixer on medium speed until well blended. Add dry pudding mix and remaining 1-1/2 cups milk; beat on low speed 1 minute.
LAYER half each of the cake, preserves, peaches and pudding mixture in 1-1/2-quart serving bowl; repeat layers. Cover surface with wax paper or plastic wrap.
REFRIGERATE serveral hours or until chilled. Store leftover dessert in refrigerator.