Wash and peel the potatoes. Cut into 1/4" slices and cut in half. Place in a large pot of cold water. Bring to a boil, lower the heat and cook for 8 to 10 minutes until fork tender. Drain potatoes and set aside. Preheat oven at 350°F.
In a small saucepan, combine the milk and heavy cream and bring to a slow boil over medium heat. In a medium saucepan, melt butter; add flour and stir until well-blended and almost golden. Gradually add the warm milk-cream mixture to the roux while stirring, until well-blended. Season with salt and pepper to taste and simmer on low, stirring occasionally, for 10 to 15 minutes. Remove from heat. Add two-thirds of the grated cheddar cheese to the white sauce (and optional nutmeg); whisk till blended. Adjust seasoning. Place the potatoes in an oven casserole and pour cheese sauce over them. Top with remaining grated cheese. Bake for 45 to 60 minutes until piping hot and bubbly. Serves 6 to 8.