Combine sugar, water and cornstarch in a saucepan over low heat. Stir constantly until mixture begins to thicken.
Add half the blueberries, stirring well. When mixture becomes very thick, add the lemon juice, butter and nutmeg. Stir until butter melts. Remove from heat and add the remaining berries. Set aside.
Butter a 9x13 glass baking dish and preheat the oven to 350°. Remove the phyllo from the plastic wrapper, leaving it in a tight cylinder. Cut the dough in 1/4" slices. Separate it in half and loosen the rolls into loose shreds. Place one half of the shredded phyllo in a large bowl.
Gradually and lightly drizzle half of the melted butter over the strands. With your hands, toss to coat. Place coated phyllo in the bottom of the prepared baking pan.
Spread the cooled blueberry mixture over the prepared phyllo. Repeat the phyllo with the remaining butter and toss to coat. Place this over the blueberries, covering completely. Cover loosely with aluminum foil and bake for 30 minutes.
Remove the foil and bake until the phyllo is crispy, 25-30 minutes. Remove the strudel from the oven and cool.
Dust lightly with powdered sugar. Whip cream lightly, add sugar, and whip until peaks form. This may be served warm or at room temperature. Also very nice with French vanilla ice cream.