All people talking about Unreal, great points. I never heard of it but I will look into it and make a decision. Unity really seemed easy to learn and develop with but what you are saying makes a lot of sense.
To Unity fanboys, is it really that sloppy/inefficient you think?
PS: I was thinking making the game a browser game like deadfrontier, Unity seems to make it easy, i don't know about Unreal.
I am definitely not a Unity fanboy and I will probably never use it for a single project.
But I think that, in terms of performance, it would not matter that much, since games made in Unity are usually lighter by nature.
Also, both Unity and UDK have licenses with and without source code access, afaik.
Unity does have graphics that yells "2006!", but it is meant for games where graphic performance and "quality" is not that critical.
And when I say it looks like some old games, I mean it doesn't look like today's top notch games that usually go for an internally produced rendering engine.
So, feel free to judge it by yourself, take a look here: http://unity3d.com/gallery/made-with-unity/game-list
But yes, that's true. UDK does have a better look, as an example, Bioshock Infinite was made with UE3, as was Dishonored and Borderlands 2. So, as someone probably said already, UDK is some sort of wrap for UE3 that makes development faster. This faster development comes at a performance cost, but one that is probably easier to overcome with udk than in Unity.
But again, see for yourself, take a look
http://www.unrealengine.com/en/showcase/udk/ here for UDK
http://www.unrealengine.com/en/showcase/ and here for UE3
My personal choice would be UDK any day. But I won't say the future can't change this. As a side note, UDK will probably support UE4 in the future, but I wouldn't wait for it.
But Unity may be more than enough for you. It is heavier, but more didactic. You probably would have results faster.