Tin, I've heard to transplant when 5 or 6 true leaves and I do this with my seed grown in community trays, not peat pellets. But in this case with the peat pellets, the young roots will not suffer too much as they are contained. I recommended only removing the netting from the root ball and placing the whole thing intact into a 4" pot.
If you are still unsure...then leave them as is in the peat pellets until they have more leaves but keep the pellets moist.
