What features should every software package offer? Are there any features so important that it's not worth considering a package that doesn't offer them? What are the killer features you personally look for, or which lead you to choose the software you currently use?

First, let's dispel a popular myth: "all DAWs sound different". Short answer, they don't. So, really it's down to feature set. A checklist of requirements:

1) BUDGET!

2) MIDI sequencing capabilities

3) Audio recording/editing capabilities

4) Number of audio tracks required

5) Number of virtual instruments required

6) Video syncing requirments

7) Quality and quantity if bundled instruments, effects and ROMplers

6) (probably the most important) Personal preference.

There's little details such as automation editing functionality, routing options, insert slots and stuff like that but that's not a concern for you at this stage (dip your toes in first!).

DAWs such as Cuckos's Reaper and FL Studio have cheap entry level versions (and I believe you can try Reaper for free for as long as you want). Other DAWs such as Cubse have a variety of pricing structures but there's no demos to try before you buy (although student licences are dirt cheap).

Are there any features that would be considered important to the majority of composers but which a beginner might not think to look for?

In my opinion: when you start out, every DAW is hard to use (with varying degrees, of course). Don't plump for a more limited DAW with an easier learning curve as making the work flow transition to a more featured DAW at a later date is a cost of your time.

Is there any particular process you follow when trying out demo versions of software to make sure you've tested thoroughly, or do you just play around with them?

Really, it's all down to personal preference. Every modern DAW is more than adequate for producing high quality, professional music (it's the entity between the chair and keyboard that counts) but if you're going to be doing, say, a lot of audio recording and editing then something like FL Studio probably isn't your best option. This is a bit of a chicken and egg scenario so your best bet would be to download demos of each DAW (where appropriate) and have a whirl.

Lastly, what software do you personally use, and why did you choose it? Are there any areas you feel are lacking in your current set up, or is there anything you're really wanting to add to it? Would you recommend the same software to others?

We're in flame war territory but I personally use Cubase because it's the most feature rich for the work I do. It's certainly not flawless and in an ideal world I'd have a DAW encompassing the best of all worlds but reality dictates trade offs have to be made. Some options might not be available, such as Logic (Mac only) and FL Studio (PC only). In all likelihood you'll stick to what you started out it so it's all ultimately meaningless (within reason).

What do I like about Cubase? Well, I like the clear separation of arrangement and mixing, the MIDI editing is second to none, the audio recording editing is very strong, the bundled effects are mostly decent and the general suite is comprehensive and competent. Things I dislike are the limited number of insert slots and the rigid routing and signal flow (Cubase is much more of an 80/80 rule piece of software which can be restricting at times).

On top of this a decent audio editor is essential. In order of personal preference: Adobe Audition, Wavelab, SoundForge, possible Audacity (never used it myself but it is free).

To clarify your aims a bit more, what sort of music do you intend to be writing?

I am a relative newbie and from my experience so far (I own FL Studio) you can always find a place for a new plugin. I use vsts for instruments, effects and midi control-- a lot of the plugins I use are freeware. VST is a very common format for plugins, and I would expect vst1/2 with 32bit support in any capable DAW. There are also 64bit plugins and vst3, but I haven't had much success with those yet, or even encountered situations where there wasn't a vst1/2 32bit version (your DAW needs to have support for 64 bit plugins to use them, either natively or via a bridge).

When I was on the market for a DAW, I had no previous experience on the topic. I did have a copy of some old/light version of Sonar which I tried for about 2 seconds before I was convinced that I didn't want anything to do with that. Although of course I would recommend people to try demos before they buy, I personally didn't want to clutter my PC with crap and couldn't commit myself to fairly evaluating any time limited trial versions. It was quite realistic that I could go a month without trying and lose the chance. My decision came down to researching other peoples experiences and trying to gain a perspective of what a DAW is and what to expect for my budget. FL studio seemed to get mentioned a lot, with comments that there were beginner friendly aspects to it and I saw that there was some decent youtube videos I could learn from. Ultimately the lifetime free updates sealed it for me, since I personally like the comfort of knowing the product I chose would get better even if I didn't like some aspect of it. Reaper was a close second for me.

When I started out I convinced myself that because I wanted to compose music electronically, that would mean I would be be satisfied with a quality synth. I researched and found many called Zebra2 the best synth and so I bought it and did use it in many of my early work (I am a hobbiest, by the way-- so 'work' is used loosely), but I found out that what I really wanted the most, 90% of the time, was to be able to replicate the intricate sounds of real instruments. Only recently I've been using samples and even soundfonts, but I do make use of a variety of synths too. In hindsight I did get ahead of myself buying Zebra-- as a beginner, 'programming' synths is not as fun to me as I imagined :P

I can't comment on all DAWs, but I do believe in the general case most people will be using plugins to extend their DAWs functionality. It's like buying an operating system, sure it may come with paint and sure some people will paint a master piece with it, but you will have to buy photoshop or go ahead and download free alternatives like paint.net/gimp etc if you want quality results in good time and lower effort.

The thing I really pay attention to, is how stable the DAW is when handling 3rd party tools.

By 3rd party tools, do you just mean external samples/VSTs/instruments, or are there other tools/plug-ins to be considered? Is in common to need to use external plug-ins, or do some DAWs include all needed functionality out of the box?