A group of 4 people need visas for a July vacation, how many passports can we send in one envelope?

Personally, I don't think one envelope is enough to pack four passport. Don't forget the four visas!
You'd better post each of your passport and required documents individually.

BTW, why not apply for the visa at the emabssy in person, or through a visa or travel agency. You have to bear a great risk of losing your application documents and you have to wait for a long time to get the visa if through mail application.