One of the GREAT things about peppers in general is that they can be harvested whenever you are hungry. As soon as they look the right size, go right on ahead. You can let them go longer if they are a 'red' variety (I almost ALWAYS let jalapenos go red, yum!) but green is fine.
I dry mine the same way I dry buds- either hanging (if you do this, don't pierce the skin! Clip the stem to a line) or on a rack in a climate-controlled room, like RIGHT by the a/c unit where the air is super dry. If the weather is nice and dry anyway, I just put them in a wooden bowl and leave them out in the kitchen and they dry just fine.
I have never dried green peppers of any variety though. I don't know if you can do that.
On the up side, they freeze BEAUTIFULLY. Just toss them in 2 layers of ziplocs and throw them in the freezer. To use, they are easy to slice up even when they are still frozen, and don't need to be thawed before grilling or sauteeing.

lol you KNEW I would answer this thread, right? mmmmm hotness.... gimme sum dat!