Step 1: Reaction of diazonium salts.
When diazonium salts are heated or boiled in water, they undergo hydrolysis, leading to the formation of phenol.
Step 2: Conclusion.
Thus, the correct product formed is phenol \( C_6H_5OH \), so the correct answer is option (C).
Final Answer:
\[
\boxed{\text{(C) } C_6H_5OH}
\]