In bowl, mix bread crumbs with milk. Let stand for 5 minutes. Add the beef, egg, garlic powder, Italian seasoning, salt and pepper.
Shape into 8 meatballs. Press a well into each with your thumb, place a cube of the mozzarella inside and press the meat over to enclose the cheese. Place 1 meatball into each of 8 wells of a muffin pan. Combine the strained tomatoes, brown sugar, vinegar, season with salt and pepper and spoon over the meatballs. Bake in 400°F oven for 15-20 minutes, until cooked through.
Serve sprinkled with parsley, if you like.