Just wanted to give my two cents about transplanting & the peat pellets. Be careful with the Jiffy peat pellets, since it's very easy to over-saturate them when you first start out. You really don't want to plant in them right away until they have a chance to dry out to the point where they're moist but not sopping wet anymore. I killed a lot of seeds figuring that out.

I've been going from the peat pellets to the smaller peat pots like you have and then to a 14" clay pot with no problems at all. Just go with straight water after you transplant in case you've shocked the plants at all. If you let the soil in the old pot dry out before you transplant, it's a lot easier, since you can just cut that peat pot off and put it into the larger pot. Be sure to dowse the soil thoroughly after you transplant, so that the plant is encouraged to spread its roots out into the new soil.