Thanks for sending the photo - it helps a lot. What I think I see is the peppers in the pot look wilted. This is most likely due to too much water (only because you suspect you may be overwatering) but a soil fungus can also attach the roots and cause the plants to wilt and drop fruit. At this point would let them dry out a bit if the soil feels moist to the touch and remember that peppers are heat-lovers and do not need that much water. Also, you mention the peppers in too small of pots seem to be doing fine - this suggests you are watering too much as plants in pots dry out quickly - and this may be why they are doing fine. Keep growing, Marianne Binetti