I don't often promote buying stuff, but I came accross these and thought that if I was going to get some seed starting modules, these look like they might be reasonably ethical and practical:
(source)
Made of natural Fair Trade sourced rubber they have a range of different sized trays which can also be cut down. Also some deep ones similar to 'root trainers'.
the Plastic Free Gardening seed tray is robust, flexible and long-lasting. Gardeners are sure to appreciate the supple nature of the natural rubber used to make the seed trays, making removing seedlings easy.
They are a little expensive - oh well, at least I know what to ask for for christmas this year!
This is a UK based wildlife product company, I don't know where and whether these might be available in the US and elsewhere.