In large bowl, beat granulated sugar, 1/3 cup softened butter, peanut butter and 1 teaspoon vanilla on medium speed about 3 minutes or until light and fluffy. Add eggs, one at a time, beating on medium speed 1 minute after each addition. On low speed, beat in dry ingredient mixture alternately with 1/2 cup milk, beginning and ending with dry mixture. Divide batter evenly among muffin cups. Smooth tops of batter in cups with wet fingers.