In a large bowl, combine the first eight ingredients. Crumble beef and pork over mixture and mix well. Shape into 1-3/4-in. balls. , Place meatballs on a greased rack in a shallow baking pan. Bake at 350° for 25-30 minutes or until a thermometer reads 160°; drain., Meanwhile, in a large saucepan, saute onion and garlic in oil until tender. Stir in the tomatoes, tomato sauce and paste, water, parsley, sugar, basil and pepper. Bring to a boil. Reduce heat; simmer, uncovered, for 15 minutes, stirring occasionally. , Add meatballs to sauce; simmer 5 minutes longer or until heated through. Serve with spaghetti.