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@ Fonzerelli - Right!...forgot about Renderware.

I agree with most of you, the FPS engines are most technically advanced. You will never hear Miyamoto talk about dynamic shadows when he is talking about Mario Galaxy. But I still think that it has to do with tools that Unreal provides rather than the technical aspect of it. Why would Undertow bother with Unreal 3 engine otherwise?

Doing some research, Unreal 3 seems to have won the engine war this generation as there are more games in development for it than all other engines combined. http://en.wikipedia.org/wiki/Unreal_Engine#Unreal_Engine_3_2

@Avalach21 - Source is a great engine and some amazing games have been made with it, I have added it to the list ;)