Best way to transfer seedlings?

Hi!
I have six small plants that are about 2 inches tall each.
I have grown them in pete pellets and roots are starting to come through the bottom so i think its time to transplant them into bigger pots.
I would like to know what is the best way to do this? Do i cut the netting off of the pete pellets? how deep do i plant them in the new pots and what pot size should i use?

Many thanks my friends,
DrGreenthumb

what medium are you going to use and what system?

I'm going to use peat moss,perlite and vermiculite in equal quantities.I am growing inside under flouro's and 100w Sodium.