In a large bowl, combine walnuts, 1 cup of sugar and 1 tablespoon of cinnamon and put aside.
Melt 1 stick of butter in a saucepan over low heat. Add the chopped peaches and simmer until the mixture is thick. This should take about 25 minutes. Mash the softened peaches with the back of a spoon. Transfer the peach mixture to a shallow pan and chill completely in the refrigerator.
Melt the remaining butter. Grease a 10 X 16 X 2 inch pan. Remove the phyllo sheets from the package and wrap in a damp towel. Working quickly, brush a sheet with butter and place it in the greased pan. Repeat this process with 7 more sheets of phyllo.
Sprinkle 1/2 of the nut mixture over the pastry sheets. Brush 5 more sheets with butter and layer over the nut mixture. Spread the cooled peach mixture over the pastry. Top the peaches with another 5 buttered phyllo sheets. Spread the pastry with the remaining nut mixture. Top with 7 more buttered sheets. Top with 1 remaining phyllo sheet that is without butter.
With a small sharp knife, cut the pastry into 1 1/2 X 1 1/2 inch diamonds by making diagonal cuts. Make sure that you cut all the way to the bottom. Using a spray bottle filled with water, spritz the top of the pastry generously to prevent curling in the oven. Bake in a 325 degree oven for 6o to 90 minutes until the top is golden brown.
Place the remaining 2 cups sugar, water, cloves, remaining 1 tablespoon cinnamon, and orange and lemon zest in a small saucepan over medium heat. Boil for 10 minutes, then add honey and allow to cool slightly. Strain the syrup and set aside. When the baklava comes out of the oven, pour the syrup mixture over the pastry. Chill the pastry in the refrigerator overnight before serving.