I pot up into the same basic potting mix that the seeds were put in (ProMix, etc). Most of the time I find that I do have to fertilize or the seedlings stay at a few inches high, even if the mix says that it has starter nutrients.
I start all of my seeds of a given variety (usually about 5 seeds) in a small cell and then pot them up to 3" to 5" pots when they get crowded (1 repot). This saves on space under the lights. At the time of repotting it is often warm enough here during the day that I can take advantage of sunlight.
The root studies TomNH mentioned are here (see links). There are actually two or three studies discussed, and it can get confusing. One focusses on the effect of multiple repotting (more than one is not beneficial to the plants, but is used to conserve greenhouse space). one stdy or part of a study looks at the use of large individual pots (4-6") for seedlings (beneficial) vs seedling flats or small pots (not as good). The other study focusses on root development between direct sown plants (seeds planted in the garden) vs seeds started in pots and then transplanted. The transplanted ones developed fibrous roots, because of the root disturbance caused by transplanting, and grew faster because the direct sewn ones tended to send a tap root down into the colder deeper soil. The two studies are not adequately separated in the discussion, so there have been forum discussions arguing about how many times to pot up for the best root development.
http://www.soilandhealth.org/01aglib...010137toc.html
more specificlly this tomato chapter
http://www.soilandhealth.org/01aglib...10137ch26.html