garden under attack?

For a couple weeks now I have been battling some sort of bug on my bell pepper plants. The first time I looked I was able to find some yucky little slug things, got Brandon to help me pick them off and sprayed the plants with (organic friendly) insecticidal soap. Since then have have continued to grow, but have also continued to develop holes on each new leaf with no sign of the culprits (at least that's evident to me). None-the-less the had begun to develop some little peppers, until this weekend when two of the three peppers were stolen by the squirrels. I know it was them because I found one of the chewed peppers laying on the ground next to the plants.
But that's not all! Today, horror of horrors I found a huge ugly moth on my tomato plants which I learned lays eggs that grow into tomato hornworm caterpillars which apparently can devastate a tomato plant in a night or two!
This means war! or does it. One of the tenets of organic gardening is supposed to be to cultivate the "good bugs" and deter the bad ones, my insecticidal soap being the last resort because it doesn't discriminate. So there's part of me that is a little hesitant to just got nuts with the stuff. But according to all the organic gardening websites I keep an eye on the first line of defense is bug hunting by hand. The idea of picking them off individually grosses me out, but spraying indiscriminately doesn't seem right either. For now I'm considering a concoction of 3 parts water to 1 part hot pepper sauce which should deter bug and squirrel munching, but it's going to require some diligence as a caterpiller scout. If you have any advice let me know - I'm a gardening novice.