The official reason is size. Karl has said that adding that half tone would add to the size of the ocarina considerably.
I found myself thinking about this again, because it occurs to me that the C5 "alto" is so much the standard in the transverse ocarina world. I think a 10-hole C that looks like the G would entice more buyers, regardless of size. I know it's not feasible to redesign now, but at some future date I hope the 10-hole C comes.
I agree. The extra size would be worth the tradeoff to me.