Well perhaps you are correct, but logic controls almost no aspect of governmental decision-making. NASA has increasingly been required to operate on a shoestring budget, and the cacophany of gubmit-haters (you know very well who they are) would never have permitted funding of a rational decision. Unless of course, their beloved corporations could make a few million in quick cash.

NASA's original designs for a space shuttle were meant as small vehicles to carry astronauts only.

Remember the idea was to have a space station, a shuttle to ferry astronauts to the station and NASA would keep her Saturn v's for heavy lifting.

The SaturnV production line was shuttered at the end of Apollo. Nixon cancelled the space station and further manned missions to Mars. What was left was the shuttle and even that was in danger. So the shuttle became not only a people mover but also a truck, NASA also made a deal with the USAF so the shuttle would launch DoD payloads as well. All of this resulted in a heavier, more complicated vehicle.

As for Shuttle C, it hasn't died. Google "Side Mount HLV". It's being kicked around as one the concepts to replace the Ares I booster which itself seems to be on the verge of cancellation.

See Richard Branson.