For the best frosting, make sure the cream cheese is chilled. If the frosting is too thin, place it in the refrigerator for 30 minutes or until spreadable. Store frosted cupcakes in the refrigerator.
Preheat oven to 350°.
To prepare cupcakes, combine 1/4 cup granulated sugar and banana; set aside. Beat 1/2 cup granulated sugar, butter, and 1 teaspoon vanilla at medium speed of a mixer until well-blended (about 3 minutes). Add eggs, 1 at a time, beating well after each addition. Add banana mixture to sugar mixture, beating well. Lightly spoon flour into a dry measuring cup; level with a knife. Combine flour, baking soda, salt, and nutmeg in a bowl, stirring well with a whisk. Add flour mixture to sugar mixture alternately with yogurt, beginning and ending with flour mixture; mix after each addition.
Spoon batter into 12 muffin cups lined with paper liners. Bake at 350° for 25 minutes or until a wooden pick inserted in center comes out clean. Cool in pan 10 minutes on a wire rack; remove from pan. Cool completely on wire rack.
To prepare the frosting, beat the powdered sugar, chilled cream cheese, and 1/2 teaspoon vanilla at medium speed of a mixer just until blended (do not overbeat). Spread frosting over cupcakes, and sprinkle with toasted walnuts.