In a large bowl, combine beef or turkey, bread crumbs, egg substitute or egg, 1/2 teaspoon pepper, and 4 tablespoons cheese. Form into balls the size of walnuts. Warm oil in a large nonstick skillet over medium-high heat. Add meatballs, several at a time, and cook 15 minutes, or until browned and no longer pink inside. Remove to a bowl,leaving drippings in the skillet.
In the same skillet in warm drippings over medium-high heat, add onion and garlic. Cook 5 minutes, or until onion is tender.
Stir in zucchini, yellow squash, cut tomatoes (with juice), crushed tomatoes, sugar, remaining 2 tablespoons Parmesan, remaining 1/4 teaspoon pepper, and meatballs. Heat to boiling. Reduce heat to low, cover, and cook 20 minutes. Stir in basil. Serve.