Cook bacon slices in skillet until crisp.
Drain bacon; crumble and set aside.
Pour off drippings, reserving two tbsp in skillet.
Saute onion and green peppers in drippings;
stir in tomatoes and sugar. Bring to a boil;
reduce heat and simmer 30 mins., stirring occasionally.
Bring water and salt to boil; add grits.
Cook 10-20 mins., stirring frequently, until grits are thickened.
Remove from heat; stir in tomato mixture.
Spoon into serving dish; sprinkle bacon on top.