In a saucepan, combine the sugar and cornstarch. Stir in milk until smooth. Bring to a boil; cook and stir for 2 minutes or until thickened and bubbly. Remove from the heat. Stir a small amount of hot mixture into eggs; return all to pan, stirring constantly. Bring to a gentle boil; cook and stir for 2 minutes. Remove from the heat; stir in butter and vanilla. Fold in peaches; sprinkle with coconut. Cover and refrigerate until serving.