The last large-scale gaming engine that relied on 256-color textures is the original Unreal Engine. Every game engine later than that (Quake 3, Lith-tech since around AvP2, Unreal Warfare) uses 16, 24 and 32-bit textures, with texture compression supported. Texture compression is a much better solution than palettized textrues, in my opinion, since the gains are even larger (A texture can be compressed 8-fold, which means a 24-bit texture can be compressed to 3/8s of the size of an 8-bit texture, giving both a higher resolution, and a higher color precision)