Cut angel food cake into 9 slices. Line an ungreased 13 x 9 x 2 dish with slices; set aside. In a large mixing bowl, beat cream cheese and confectioners' sugar until smooth. Gradually beat in milk.
Set aside 1/3 cup whipped topping for garnish. Fold remaining whipped topping into cream cheese mixture; spread over cake. Top with peaches. Pour gelatin mixture over peaches.