I wouldn't be so quick to say that. I've pretty spent the better part of my life writing C code, lots of it networked. And while you can get absolutely awesome performance out of it on modest hardware the JVM is no slouch at running networking stuff, I wouldn't be surprised if it is roughly on par with optimized C for that kind of application. Usually it's the kernel side that will be your bottleneck and it won't make much of a difference what the application is written in once you are that close to the theoretical max.
Writing it in C isn't some magic bullet. Java you're spending your time optimizing the tail end of efforts, but C you're spending your time optimizing the bulk of the effort that Java gives for free. (not that I'm defending Java, but C being low level doesn't make it instantly easy to do faster stuff with).
