A tradition homemade red gravy should be made with meat, specifically pork and veal. I use pork and veal neck bones for added flavor. Instead of sugar and water, I use a little more tomato paste than usual plus Chianti and minced onion. Fresh herbs are vital to the outcome of the flavor, so throw away any of your dried herbs, they're crap. I also use grated cheese, it's a nice touch, especially if you're using the sauce for pasta.
(Note: The amount of meatballs depends on how much meat you use and how big you make them. I use a little over a pound of meat and that usually translates to 8-16 meatballs.)
VARIATION: Instead of frying neck bones, and if you have more time on your hands, you can braise a couple of good pork and veal shanks in red wine and let them soak in the sauce.