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Preheat oven to 350°F. Grease twelve 2-1/2-inch muffin cups; set aside.
In a medium bowl, stir together flour, 1/2 cup sugar, baking powder, nutmeg and salt. Make a well in the center of the flour mixture. Beat egg with a fork in a small bowl; stir in milk and 1/3 cup melted butter. Add egg mixture to flour mixture all at once. Stir just until moistened (batter will be lumpy).
Spoon batter into prepared muffin cups. Bake for 20 to 25 minutes or until a wooden toothpick inserted in centers comes out clean.
Meanwhile, combine the remaining 1/4 cup sugar and the cinnamon. Cool muffins in muffin cups on a wire rack for 5 minutes. Remove from muffin cups. Dip muffins into the remaining 1/4 cup melted butter, then into sugar-cinnamon mixture. Serve warm.