I think that the two reasons are true.
It´s true that C was developed with portability in mind, but it´s also more natural to write and think.
As many people have said in other replies, C is right if you don´t care about the size of the executable image or the time it takes to complete the task, but if he can do the job, and you don´t matter other stuff.. i think is right. Also don´t forget that you can always write the sensitive parts of code in ASM to run faster, and if you have little RAM or EEPROM, you have to choices, write all the code in ASM to see if you can squeeze every byte or buy a bigger chip or memory.
I think that the price of the chips with bigger memory is going down and in a couple of years i don´t think that we´ll see a microcontroller with 256 bytes of RAM or something like that..

The question is: It is worth squeeze my brain, or C can do it ?

PD: although for some applications 256 of RAM is fine