Since you aren't knitting a pattern down onto the instep, you are really free to transfer the sts in any way. I would say that if u move the sts onto the back of the needle with your working yarn & have this needle as your needle with your heel sts...that this would be the most 'correct' way, bc u will not have knit 'more' sts on the sts that you would tranfer from the dpn in front of the working yarn....if that makes any sense @ all
As far as the instep sts go, u can just rearrange them on the other 2 dpns after you finish the heel, or transfer them to a st holder (I opt for a piece of yarn bc u then won't have the pressure at the sides of the dpns where u pick up the gusset), which ever u prefer, bc they are patiently waiting their turun to be stitched after u finish shaping the heel.
Now, I hope I've not confused u too much
