In a mixing bowl, dissolve yeast and 1 teaspoon sugar in 1/2 cup water; let stand for 10 minutes. Add milk, salt and remaining sugar and water. Gradually add 2 cups flour; beat until smooth. Beat in egg and oil. Stir in enough remaining flour to make a soft dough. Knead on floured surface until smooth and elastic, about 6 to 8 minutes. Place in greased bowl; turn once to grease top. Cover and let rise in warm place until double in size, about 1 hour.
Punch the dough down. Divide in half; roll each half on floured surface to a 1/3 or 1/2 inch thickness. Cut with a floured 2-1/2 inch round cutter. Brush with butter if desired. Using the dull edge of a table knife, make an off-center crease in each roll. Fold along crease so the large half is on top. Press along folded edge. Place 2 to 3 inches apart on greased baking sheets. Cover and let rise in warm place until double in size, about 30 minutes. Bake at 375 °F for 15 to 20 minutes or until golden brown. Remove from pans and cool on wire racks.