Hmmm, you do have drainage holes in those cups, don't you? What about lighting? Do you have any fluorescent lights over the seedlings? I can't speak for the peppers, basil, etc., but I do know that I've grown tomato seedlings with window light and man, were they small when I planted them.
Read up on some of our seed starting threads (do a forum search) and take note of the t-8 lights that some of us used on our seedlings. They can be bought very cheaply (under $20) and make a world of difference with the tomatoes and peppers.
Also, how crowded are your seedlings?
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