Drain onions.
Melt butter in 2-quart saucepan over medium heat.
Stir in flour; cook and stir 1 minute, until bubbly.
Stir in half-and-half and sherry; cook and stir 2 minutes or until sauce thickens.
Stir in cheese, mustard, nutmeg, salt and pepper.
Add onions; pour into 1-½ quart baking dish sprayed with nonstick cooking spray; sprinkle with paprika.
Bake at 350ºF 15 to 20 minutes, uncovered, until bubbly.