Tie spices in a spice bag. Combine sugar, vinegar and spice bag in a large sauce pot; boil for 5 minutes, then drain peaches.
Cook drained peaches in boiling syrup until they can be pierced with a fork, but don't let them turn to mush. Remove from heat and allow peaches to set in pickling liquid overnight to absorb the juices and plump up.
Next day - Bring the mixture to a boil. Remove spice bag. Pack peaches into hot jars, be sure to leave sufficient head space.
Ladle the hot liquid over peaches, leaving 1/4 inch head space. Remove air bubbles. Adjust lids.
Process 20 minutes in a boiling water canner.