I create my own game engines. My Fairy Tale, Star Story I and II have been created with the Apollo Game Engine, which I created myself. Star Story II is however the final project in Apollo as I am just in the development of a brand new engine named "Scyndi's Creative Interpreter" (or SCI for short) in what I am also doing my next project already.
I create as many tools myself as possible in either C++ or C# depending on what I need for that specific tool.
But as I can also not do all by myself, I also use programs like Paint.net, GIMP, Audacity and such. I have not really a "favorite". The tool just has to do the job and shouldn't be too hard to use.