I was wondering what kind of engines start-up developers use. Do they just develop their own(like Offset Software), or do they get it through a publisher? Also I have heard engines like Gamebryo can actually be "test driven" for free, so is this another process other developers use on start-up?

That's really too general a question. The answer is "it depends." Mostly on the developers, what they're making, and what their experience is.

jpetrie is right it depends. For the game we're currently developing for the DS me and the Senior programmer developed our own libraries, 3d software engine, and game engine from the ground up to avoid copyright issues, on other libraries etc. We still use proprietary toolchains to build the image, but that might change soon. For PC engines already exists that can be easily modified to rapidly develop a game. But if you're trying to do something revolutionary and new it becomes quite a bitch trying to modify the hundred of thousands of lines of code of complicated engine to do exactly what you want rather than just getting a few buddies and going from the ground up. If you are a beginner game engine development is the most complicated task on the planet in my opinion almost as hard if not harder than writing drivers for complex GPU's in my opinion. It takes experience, and knowledge of a lot of different topics. Almost all of the ones covered in articles on this site. Open up an open source 3d engine and an open source game engine and see how all the parts interact, that's the best way to start. If you're starting blank with an empty code project, it'll be quite the daunting task.

Good luck though.

I suppose not only do you have to consider the technology you want, but you may also have to justify the technology.

For example, we all look at AAA titles such as Crysis, Unreal Tournament 3 or Quake Wars. These are by well known developers working for large publishers.

Is your first game going to be a AAA title? Very unlikely. Even if you do get the publisher to support you, your not going to have the necessary experience, knowledge or team members to even support you to make one.

Say we at look using a 'simple' technology that is normal mapping (dot3 bump mapping), that is commonly found in AAA titles. Coding it is relatively easy these days due to the large numbers of tutorial around. But actually making the assets for it ... that's hard. Sure you could use various tools to try to transform your diffuse textures into normal maps but they often looks horrible and plain wrong. The proper way to do it of course, is to build high resolution meshes which then get ray traced into a normal map.

The number of tools you need to buy to even generate good normal maps is quite a lot. If you decide to go free ware by using blender, or what not, then there are other considerations to make (very few developers will ever use blender) so you have to convince your team members that learning a tool (which isn't going to help them professionally) is a good idea.

Anyways, the end point is, match your engine and engine technology with the game you want to make. If your game idea is too big for your team or yourself, then don't go round trying to match it by getting an even bigger, more expensive engine.