Spaghetti with meatballs is an American invention. That said, it is most definitely an Italian-American invention. According to my grandmother, my great grandmother (who came from Italy) made it that way, and I know that we definitely do too.
I personally think it is better this way, having had the proper Italian version where the meatballs and whatever else was in the sauce is served afterwards. For one thing, the meat really benefits from being with the sauce, and it also makes for less trouble and everyone can sit together and enjoy the meal without interruption.