They'll be fine. I have had a few sets of various types of peppers do the same. The pepper plants I had do this may have not been getting as much light, but they have since got their third set of leaves now. Just let 'em grow, they'll be okay! As long as they look healthy they are probably fine.

Are you using 6500k lights by any chance?

They look fine to me. You have them planted down pretty low in that cup and maybe they are just reaching up towards the light. I wouldn't woory abou them if they were mine. I am growing 5-6 Banana peppers this year.
Bruce

Thank you - yep, learning the hard way the soil will settle more than I thought and to use more of it.

I am using 6500K lights - think that is contributing?

jennie,

6500k is perfectly fine with them being that close to the plants. That's what I use over my plants and they are moving along quite well.

Amos

My alma's, poblano's, peter's, and orange Thai's all look like that at some point. I think it's perfectly normal.