For sauce, in a medium saucepan, stir together brown sugar, vinegar, water, and dry mustard. Stir in green and red peppers. Heat until sugar is dissolved.
Meanwhile, in a large mixing bowl, combine the eggs and milk. Stir in the bread crumbs. Add the pork and ham; mix well. Shape the mixture into twenty-eight 1-1/2- to 2-inch balls. Place the meatballs in a 13x9x2-inch (3-quart rectangular) baking dish; pour the sauce over the meatballs.
Bake in a 325 degree F oven for 1 hour or until internal temperature reaches 160 degree F basting every 20 minutes.
To serve, transfer the ham balls and sauce to a chafing dish or heatproof dish placed over heat. Makes about 15 appetizer servings.