I know you know this; however,

1. How is your watering situation
2. That much direct/indirect lighting could be drying out your soil
3. Soil mixture could be extracting the water you make available too fast thus leaving the soil around the seedling w/o needed water amounts

Just some thoughts.

I'm no expert, but have had great success with seedlings started indoors. My theory is that they need light as soon as they come out of the ground. So I put my lights on them right away.
I also put a fan on them right away. This prevents mold and helps strengthen the plants. You don't want them to grow for a month without any "exercise" and then hope they can stay up when some wind comes along.
If my plants grow short, thick, and stocky, I am MUCH happier than if they grow tall and lanky. If a plant is not getting enough light, the cells will expand to "stretch" for the light. This is why plants bend towards light -- because the back side that is in the shadow stretches. Stretching is not good. It is better to have a plant that is happy with the light it is getting and puts its energy into producing strong leaves, stems, and roots.

Thanks loweride.

I agree that a short, thick stocky plant is better than a stretchy, thin plant. But that is when all other things are equal.

My problem is it gets short, thick and stocky but with seemingly burnt out leaves. Whereas the a bit leggier has near perfect leaves.

Its coming as a package deal. Now which package should I chose?

When seedlings sprout outdoors, they get full sunshine as soon as they emerge from the ground. Treat your indoor plants the same -- the pot should either be situated 2" or so under lights so the seedlings get maximum light when they emerge, or if you must germinate them further from the lights, move them within an inch or two when you first see them emerge. Fluorescent lights are much less instense than sunlight, so you want to get your plants close to them from day 1.

What wattage are your CFLs?

20 watts.
They do produce a lot of heat. My usual room temperature is between 70-75F. I placed the room thermometer just right close to the CFL perhaps an inch away. And it was a whopping 90F. I think that would be too much for the little ones.

Peppers are generally more stocky than tomatoes.
But your descriptions fit to the scenario of :
IMO:
Light source is too close and heat is excessive.
What make a seedling leggy, spindly, is due to the opposite conditions:
Not enough light, light source is too far, it is not warm enough.

But generally, stocky seedling is preferred over spindly one.