Leaving peels on the apples, core and slice them, and place in a food processor. Pulse until apples are in small pieces — you want to retain some texture. Set aside.
In a large bowl, beat together cake mix, cinnamon, eggs, apple butter, canola oil and water until smooth (about 90 seconds). Add apples and beat another 20 seconds.
Line a muffin tin with muffin cups, and spray with cooking spray. Fill cups ¾ full. Bake 18-22 minutes. (These will not rise as much as traditional cupcakes because of the weight of the apples.) Allow cupcakes to cool completely before frosting.
For frosting, beat together cream cheese spread, powdered sugar and vanilla until smooth. Spread on cupcakes. Sprinkle cinnamon sugar over each cupcake, and top with a pecan or walnut.
Notes: You will have leftover frosting. I serve it as a fruit dip with strawberries, apples and grapes. This cupcake recipe can double as muffins if you leave off the cream cheese frosting and serve warm out of the oven. They make a tasty breakfast treat!