In a large saucepan, combine sugar, peaches, basil and water; bring to a boil. Reduce heat; simmer 5 minutes. Remove from heat; let stand 30 minutes. Discard basil; stir in lemon juice. Refrigerate until cooled completely.
Process half the peach mixture and 2-1/2 cups ice in a blender until blended, adding more ice if desired. Repeat with remaining peach mixture and ice. Pour into chilled glasses; serve with peach slices and additional basil.