That's a cigar butt.

Funny Dennis,,,,

You should be concerned, it came out of one of your babies!!! It "was" only about 5/8" long or so.

This post was edited by kclost on Sun, Jun 22, 14 at 16:00

cutworm.

Maybe a Tent Caterpillar.
Probably not a problem for your peppers but if you have those whitish cacoons on lower tree branches in your area, then that is probably what this guy is. They do eat foliage, but usually the host tree or shrub. Not garden vegetables.
Here is one on one of my peppers a few years ago. They were really thick that year.

Here is a link that might be useful: eastern tent caterpillar

This guy was inside a pod, noticed a 1/16" hole and he was just curled up in there. Does not appear to have any hairs on it either. Looks kind of like a cutworm, but I didn't think they lived inside pods, rather in the ground and fed at night.

Oh, inside the pod....yikes. That is a problem. I had a bell pepper last year that had a tiny hole in it. The pepper grew normally but there was clearly a hole in it. I was told it was some kind of worm that had laid eggs inside but I never did find any eggs or worms when I cut it open. Does the hole in your pepper look like the one in the photo below. FYI: I did not find any other peppers affected.
Bruce

Here it is.... I can't remember ever seeing this before, so very curious.

Looks like a fruitworm.

Yes, usually known as a tomato fruitworm, these caterpillars will eat their way inside the developing fruit of peppers and tomatoes and other plants.

I've had those too. Spray with BT...

I know those Spodoptera-litura, only happens to two of my peppers and that was enough for me. I killed them and no spraying and none others appeared.

Mark

Here is a link that might be useful: Post with the same caterpillars