BEAT granulated sugar, butter and vanilla extract in large mixer bowl. Add eggs; beat for 1 minute. Beat in melted morsels. Combine flour, cinnamon, baking soda and salt in medium bowl; beat into chocolate mixture alternately with milk. Stir in jalapeños. Pour into two well-greased 9-inch-round baking pans or one 13 x 9-inch baking pan.
BAKE for 30 to 35 minutes or until wooden pick inserted in center comes out clean. Cool in pan(s) for 20 minutes; invert onto wire rack(s) to cool completely.
FOR RICH CHOCOLATE FROSTING.
BEAT powdered sugar, milk, butter, chocolate flavor, vanilla extract and salt in small mixer bowl until mixture is smooth and creamy. Frost cake. Decorate sides with nuts.