The pots may be too big...did you start them as seeds in those 4 inch pots? If the pots are too big then they stay too moist and that can cause a host of problems. It could also be a nutrient deficiency, but only if your plants are older/bigger. How old are seedlings?

Also, I try to avoid using any fertilizer until they have at least a couple sets of true leaves, but i have never used a potting mix w/ fert. designed for seedlings...!!!!

You do not give enough information. Peppers like a warm soil, like 85 degrees. Source of heat should not be the light source. How high are the lights from the seedlings? A 400 watt HID light puts out a lot of heat as well as light. I keep mine at least two feet above the seedlings. I also provide bottom heat. Sixteen hours of light sounds OK. I start my peppers in recycled sixpacks. If I were to use four inch pots I would start 9 seeds per pot and repot when they were about 3 inch tall. Sixpacks makes potting up easier with less check in the growth. Al

Why are you using the HPS instead of MH? HPS is mainly for flower/fruit production, MH for vegetative, all around growth. I keep my HID lights 4 feet away from my plants. That's why I like to use HO flourescent tubes for starting seeds then I switch over to HID lights. I can have the fluorescent lights almost touching my seedlings. 16 hrs a day on seems fine. Are the curled leaves dry? They might be too close. As the previous person said HID lights generate quite a bit of heat.