The GNU project's own compiler doesn't support C99. It stands to reason that the GNU project does not want GNU software that cannot be compiled with GNU software.
The whole point of the GNU project is to have an independently developed operating environment, that is most importantly free, but secondarily also self-sustaining. Not being able to compile itself would be a huge step backwards.
Of course, this reasoning only applies to the GNU project, not Free Software in general. However, as others pointed out, there are currently only two compilers which support C99, and both are proprietary (or at least controlled by a not-exactly-free-software-friendly company). Also, both of these compilers only target a very limited set of operating systems and CPUs (e.g. Oracle Solaris Studio only targets 5 platforms (Solaris/Sparc, Solaris/x86, Solaris/AMD64, Linux/x86, Linux/AMD64) unlike GCC, for example, which targets ... well actually I have no idea how many platforms it targets, but AFAIK it's well over 50), so by requiring C99, you would not only limit your software to two compilers, but also a small set of platforms, again, many proprietary.
Note that there are subsets of C99 which are much more widely supported, for example in GCC.