In a saucepan over medium heat, melt 3 teaspoons of butter. Stir in flour, salt and pepper until smooth. Gradually add milk. Bring to a boil; cook and stir for 2 minutes or until thickened and bubbly. Place half of the potatoes in a greased 2-cup baking dish; top with the onion and half of the sauce. Layer with remaining potatoes and sauce. Dot with remaining butter. Cover and bake at 350° for 30 minutes. Uncover; bake 30-40 minutes longer or until potatoes are tender.