Melt cheese and 1/4 cup butter in a large saucepan over medium low heat, stirring frequently. Remove the pan from the heat; stir in the sour cream, onion, salt, and pepper. Stir the potatoes into the cheese mixture, and transfer to a 2 quart casserole dish. Dot the top of the potatoes with the remaining 2 tablespoons of butter, and sprinkle with paprika.