Not really a question about WebDriver. This is more suited to a forum about test data and test automation in general. I can say that sunny's analysis of the situation is flawed. Inserting/modifying data for a CSV file is no different than editing data in an Excel file. You simply import the CSV file into Excel, edit it, export it to a CSV file.
I have no idea where he came up with the idea that Excel will start having load issues beyond 1M of data. These are more likely limitations of the file system, memory available, etc. and not really a hard and fast rule between CSV and Excel files.
Personally, I have not use data driven test frameworks for over a decade. If I was going to use one I would use CSV. It is not a proprietary format. So I don't have to worry about it changing with different releases of Excel. I can load it into my favourite spreadsheet application on any platform (Windows, Mac, Linux, UNIX), edit it and export it back to CSV with no data loss. I would avoid using a database because it is added complexity and cost. I see no good reason to add this risk to test automation. Adding risk to your production technology stack is bad but sometimes necessary. Adding risk to your test automation technology stack is just wrong.
The only downside to using CSV over other data formats is you have to be careful about how you delimit your fields (columns).