Preheat over to 350 degrees. Beat all ingredients for cupcakes together at low speed until blended. Increase speed to medium and beat 2 more minutes. Place baking cups into muffin tin and spoon batter into cups. Bake for 18-20 minutes or until toothpick inserted into center comes out clean. Transfer to wire rack to cool while making frosting.
To make the frosting, beat butter and cream cheese until creamy. Gradually add powdered sugar alternating with Egg Nog, beginning and ending with sugar and beating at low speed. Add nutmeg and vanilla extract and beat until smooth. Spread over cupcakes. Decorate with a sprinkle of nutmeg or colored sugar.