If you're trying to avoid peat pots and pellets due to the negative impact peat harvesting has on the ecosystem (often destroying entire peat bogs in the process) then you may want to try growing your seedlings in pots made from cardboard toilet paper rolls.
Toilet paper rolls have all of the advantages of pet pots or pellets without the negative impact (in fact, you're doing a good thing by putting those cardboard rolls to use rather than throwing them in the trash!). They hold enough seed starting medium to get your plants off to a good start, decompose easily once planted, and can serve double-duty as cutworm collars if you have that particular problem in your garden.
I've done a quick step by step tutorial about how to make toilet paper roll pots. I love being able to use something destined for the trash or compost and putting it to good use!