Two-wheeled vehicles have a party piece - they keep moving when traffic stops. In a city like London or Paris, a pedal cycle is faster than a car for most journeys. In a city like LA, a motorcycle can be twice as fast as a car during rush-hour.
This has effects beyond the two-wheeled rider; Remember, you're never stuck in traffic, you are traffic. A recent study suggested that if 10% of car drivers switched to two-wheeled vehicles, congestion would reduce by 40%[1]. Currently, riders of motorcycles are at an exceptionally high risk of death or serious injury. A fully enclosed two-wheeler could be every bit as safe as a car.
There are also substantial efficiency savings to be made, due to the C1's very small frontal area. A faired two-wheeler with a recumbent seating position is naturally very close to the aerodynamically ideal dolphin-shape. A four-wheeled vehicle could only achieve similar aerodynamic efficiency by being very long and low, with single or tandem seating, as in the Volkswagen 1L concept[2] or Shell Eco-Marathon competitors. This substantially compromises visibility and turning circle, making such a vehicle very poorly suited to its obvious use as an urban commuter.
[1] http://www.acem.eu/publiq/PTW_Belgium_Study_FEBIAC_ENG.PDF
[2] http://en.wikipedia.org/wiki/Volkswagen_1-litre_car