Stir water and sugar in heavy medium saucepan over medium heat until sugar dissolves. Increase heat and bring to boil. Pour into bowl. Add lime juice, lemon juice, triple sec, tequila and lime peel. Cover and freeze, scraping crystals with fork every hour until completely frozen into small crystals. Dip the rims of frozen margarita glasses into water then into a bowl with additional sugar. Scoop granita into glasses. Garnish with lime slices.
c.1997, M.S. Milliken & S. Feniger, all rights reserved