Confirmed while testing Debian 12 bookworm installers alpha 1 & 2. Picking locale "C" when installing desktop causes broken system with GNOME. A serious issue, as mentioned above, is that gnome-terminal cannot run. And, no error messages appear to inform user of problem. journalctl shows:
gnome-terminal-server[2043]: Non UTF-8 locale (ANSI_X3.4-1968) is not supported! Would help if installer allowed picking locale "C.UTF-8" instead of "C". However, another GNOME issue arises with locales "C" and "C.UTF-8": gnome-initial-setup-first-login.service fails with: ERROR:../gnome-initial-setup/cc-common-language.c:102:cc_common_language_get_current_language: assertion failed: (current_language != NULL) Ref. upstream GNOME issue "Aborts on startup with LANG=C.UTF-8": https://gitlab.gnome.org/GNOME/gnome-initial-setup/-/issues/159