In a small saucepan, melt butter over medium heat. Stir in flour until smooth. Gradually add milk. bring to a boil; cook and stir for 2 minutes or until thickened. Reduce heat; add the cheese, salt, Worcestershire sauce and pepper. Cook and stir until cheese is melted.
Place potatoes in a greased 1-qt. baking dish. Top with cheese sauce. Cover and bake at 350° for 25 minutes. Uncover; bake 20 minutes longer or until potatoes are tender. Sprinkle with paprika if desired.