For the meatballs: Combine all ingredients except the feta in a bowl and mix thoroughly. Cube the feta into about 25 pieces. Roll meatball mixture into balls and place one piece of feta in the middle of each ball. Heat a frying pan over medium high heat and cook the meatballs till browned and cooked through, about 15 minutes. Set aside.
For the Sauce: Fry onion, garlic and red peppers in olive oil. Add tomatoes, wine vinegar and sugar, and cook for about 10 minutes. Add Tabasco and chilli sauce to taste.
Add meatballs to the sauce, cook for a few minutes to heat through and serve.