Neither assembly nor C are going away. There are many, *many* jobs where these are the best tools (or where there's no alternative) and I've programmed enough ARMs, MIPSes and even 8085s (
shudders) to have gotten rid of any such delusions.
However, let me ask you a question: do you consider the iPhone or the Android platforms as embedded? Because none of those can be programmed in assembly or C (there's some work for C on the Android, but it's current API uses Java.)
There's little technical reason why C# couldn't run on such environments with a suitable native compiler (obviously without the whole framework). Indeed, both Microsoft and Novell provide versions of their .Net stacks for embedded platforms and there's a lot of developer interest in those. Just check the MonoTouch mailing list (Mono's iPhone stack) or the main mono-dev list - there's definite interest in embedded programming with managed languages, despite the limitations.