In a medium heavy saucepan combine ground cherries, sugar, lemon zest and juice, and nutmeg. With a small knife split the vanilla bean lengthwise and scrape seeds from pod. Add seeds to cherry mixture and discard pod.
Bring to boiling over medium-high heat, stirring frequently. Reduce heat and simmer, uncovered, 30 minutes, stirring occasionally. Pour into an airtight container and refrigerate up to 7 days.