Katniss lets Peeta live and saves his life
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In the first book, Katniss and Peeta both survive because Katniss pulls out poisonous berries (referred to as nightlock) and gives half of them to Peeta, telling him that if they both can't live, then niether of them should. In Catching Fire, Finnick, Beetee, Enobaria, Johanna, Katniss, and Peeta all survive because Katniss blew up the force field to the arena.
No, Katniss and Peeta do not get engaged in The Hunger Games, however, for the Capitol and for the viewers, Peeta proposes to Katniss on live television, though they never officially get married. However, at the interviews during the third Quarter Quell, or the 75th Hunger Games, Peeta anounces that he and Katniss did in fact get married at home and that she is pregnant. However, that is not true, they offically get married in the third book, MockingJay, at the end of the book, during the Epilogue.
They live in the country of Panem, in District 12.
Primrose Everdeen is in a circle of children protecting the Capitol and a bomb kills her. It is suspected to be the bomb which Gale Hawthorn's made and this is one of the main reasons that Katniss Everdeen marries Peeta Mellark and not Gale (as well as the fact he moves to District 2 to become a Goverment Official).
peeta mellark lives in district 12 with katniss everdeen