Cut cream cheese into small cubes. Let stand at room temperature. Slice onions in half length wise. Place cut side down on cutting board and thinly slice. Melt butter in a large fry pan. Set over medium heat. Add onions and sprinkle with sugar and 1 tsp. salt. Cook uncovered. Stir occasionally until onions have taken on a caramel look 30-40 minutes.
While onions are cooking, peel potatoes and cut in half. Cook a few minutes. Before potatoes are done, pour milk into a large microwave safe bowl. Microwave on medium until hot, 2 to 3 minutes. Whisk in cream cheese until evenly mixed.
When potatoes are cooked, drain well. Mash potatoes and put through a ricer and return to saucepan. Stir milk mixture, remaining tsp. salt, and pepper into large serving bowl. Top with onions and serve.