Grease a 10-inch tube pan with 2 tablespoons butter. Sprinkle pan with 1/4 cup sugar.
Cream remaining butter; gradually add remaining sugar, beating well. Add eggs, one at a time, beating well after each addition. Add vanilla and mix well. Combine 2-3/4 cups flour, baking powder, and salt; gradually add to creamed mixture, beating until well blended.
Dredge peaches with remaining 1/4 cup flour. Fold peaches into batter. Pour batter into prepared pan. Bake 325F for 1 hour 10 minutes. Remove from pan and cool completely.
Yields 16 servings.