Wes Davis sends along this from today’s New York Times real estate section. I believe the bathroom in question would not actually be considered a W.C., owing to its non-closet-like largeness and the presence of a shower, but some journos will do anything to avoid using the same word twice:
notoneoffbritishisms.com 
Just imagine what all the plumbing work costs in this “room-where-the-window-works-well!” Holy cow!
I’m sorry, but could someone please explain to this Briton what the actual noobism is in the advert? Obviously it would just seem normal to me!
The euphemistically titled facilities aren’t called the W/C in the states very often, usually it’s the bathroom. Also, as I understand it, the British W/C is usually a separate room from the one with the tub/shower. That used to never happen in the states, but now when it does, usually near the back entrance to larger houses, it is called a half-bath and there is no tub room holding the other half.
The author is getting into a transatlantic tangle. Toilet/lavatory/W.C. can refer to either the apparatus or the room containing it. In Brit English, if, and only if, the room also contains a bath or shower, it would usually be called a bathroom.
(The size of the room has no bearing on it being called a W.C. It may, for example, contain multiple urinals and toilet cubicles. The term “closet”, as in “small, enclosed space”, is primarily U.S. usage.)
Furthermore, a bathroom often does not contain a toilet. The house I grew up in was like that. I’ve heard of Americans visiting the UK and asking for the bathroom and getting just that.
I think W.C. is now a bit archaic in the UK. Loo, toilet, lavatory or bog are more common terms.
Conversely, I’ve heard of Brits visiting the U.S. being surprised to find the restroom was a lavatory rather than a place to take a nap.
I agree that W.C. now sounds rather dated unless, of course, one is referring to a Wesleyan Chapel as recounted by, I believe, Gerard Hoffnung. One of the many variants of this tale can be read at http://tinyurl.com/nb4f2s5.
For Americans, I think it’s worth pointing out the hierarchy of these words, in descending order of formality:
> Lavatory
> Toilet
> Loo
> Bog
Use the last one with caution. It has a whiff (so to speak) of vulgarity about it.
As for WC, I don’t think I’ve ever actually heard somebody say it out loud here in the UK. It’s almost exclusively confined to print.
Do you ask for “the gents'” in the USA?