Heat oven to 350 °F. Grease a 9-in. springform pan or a 9-in. square cake pan; set aside. In a mixing bowl, cream 1-1/2 cups sugar, butter, vanilla and cream cheese; beat on medium speed for 4 minutes. Add eggs, one at a time, beating well after each addition. Combine flour, baking powder and salt. Add flour mixture to creamed mixture, beating at low speed until blended. In a small bowl, combine 1/4 cup sugar and cinnamon. On another bowl, combine 2 tablespoons cinnamon mixture and apple. Then stir apple mixture into batter. Pour batter into pan and sprinkle with remaining cinnamon mixture. Bake for 45 to 60 minutes or until a wooden pick inserted near the center comes out clean. Cool the cake completely on a wire rack, and cut using a serrated knife.