I cringe at Xmas time, seeing the increasing amount of homes, each adding the huge amount of lights, electric meters spinning, panels heating and being fatigued and being pushed to the limits. Good thing for most unsuspecting people that breakers do the job keeping the load under control, hopefully. I wonder about the statistics of home fires caused by Xmas lighting overload.
The need to increase the service will depend on the amount of xmas lights installed, plus handle the load of the home. According to your inventory, your only adding 4- 20 amp circuit breakers. At face value does not seem a need to increase your service when only 4 circuits are being added, plus one circuit having one outlet added.
However, the installer is responsible for managing the connected load of the new service. The service for the new home has been sized, or should have been, according to specific rules of the NEC, and seems did not originally include the xmas lighting load.
If each of the 5 circuits for xmas lights are loaded to the maximum capacity of 80 % of 20 amps (16 amps), which I am sure will happen, one leg will need to serve an additional 32 amps for 2 circuits, the other leg 48 amps!
Considering the square footage of the home, plus the amount of air conditioning, along with the other normal loads, a service must be able to handle these loads without any problem or incident. The contractor, not only is working within the rules of the NEC and local codes, is looking out for your welfare, and his reputation.
The cost of increasing a service is not just the cost of the panel, the entire service is different, ie: larger wire, larger conduit, larger meter, all that cost more to purchase and more labor to install. I am not saying $1300.00 adder is reasonable, since you are somewhat held hostage by the builder. Perhaps you can ask for an itemized bill of material and breakout of labor. Keep in mind the contract amount of the home already includes the cost of a 200 amp service, all that the added amount is the difference in materials and labor, not the entire cost. Personally I think you are getting hosed and the $1300.00 is the entire cost of a larger service.
A 20 Amp GFI breaker costs about $26.00, and takes two minutes to install, all for $70.00? Heck of a markup!
While I do agree and applaud that the contractor is concerned about the service size and the load to be served, it does appear that he is taking advantage of the situation.
Simply upgrading to a larger breaker for each circuit is not the answer, for many reasons too numerous to list here.
Again, a 20 amp circuit is allowed to be loaded to 80 % of it's capacity when the load will operate 3 hours or more. This means 16 amps or 1920 watts. It will be your responsibility to insure that the total amount of lights connected to each circuit does not exceed that amount.