In saucepan, over medium heat, combine the peaches, sugar, and water. Bring the liquid to a boil. Reduce the heat to medium low and simmer for 5 minutes. Remove from the heat and cool. In a blender, puree the mixture until smooth. Add a enough water to thin the puree out into a peach juice. Pour into a shallow dish and freeze until firm. Remove the peach mixture from the freezer and allow to sit out for 10 minutes. Using a large spoon, scrape the mixture back and forth to form a slushy mixture. Fill each flute glass 2/3 of the way with Champagne. Add the slushy peach mixture and serve.