Heat olive oil in a large saucepan over medium heat. Add onion; cook and stir until lightly brown. Mix in 2 cloves garlic and cook for 1 minute. Stir in crushed tomatoes, tomato paste, water, sugar, 1/2 the oregano, and bay leaf. Season with salt and pepper. Bring to a boil, reduce heat to low, and simmer while preparing meatballs.
Mix ground round, bread crumbs, remaining oregano, remaining garlic, parsley, eggs, and cheese in a large bowl. Season with salt and pepper. Roll into 1 inch balls, and drop into the sauce. Cook 40 minutes in the sauce, or until internal temperature of meatballs reaches a minimum of 160 degrees F (72 degrees C). Remove bay leaf.
Bring a large pot of lightly salted water to a boil, and stir in the spaghetti. Cook 8 to 10 minutes, until al dente; drain. Serve meatballs and sauce over cooked spaghetti.
