Is an iPhone 5C suitable for Development in 2017?
"Virtual Machine running on a Windows Laptop"

Good luck with that one. There is basically no 3D acceleration in any VM for Windows running macOS currently available. Linux is able to achieve this in some cases (KVM + spare macOS-supported PCIe GPU), but it has its own set of different limitations that may break the deal for you. And it's also banned by macOS's EULA.

"along with using an iPhone 5C to test and debug"

iOS 11 will make the 5C obsolete, as well as any and all 32-bit apps, so you won't be able to do much with a 5C. (Unless you're developing for less than 3 months ;) )

"I do not know if that would also apply to games."

It would, and even more so. There are many technical limitations with 32-bit apps that 64-bit OSes do not have, notably the restriction to no more than 4GB of RAM. It is relatively safe to assume that Apple ended 32-bit app support because the iPad Pros push right into that 4GB limit, and there can only be more and more RAM installed into iOS devices.

What would I do?

If you're going solo, make your current laptop a Hackintosh (it breaks the EULA but it's your best option for now) and run all your apps in the Simulator or on friends' devices. I say this for two reasons:


If you don't make enough money to buy a Mac (~$1000+), you likely aren't a very big company and Apple will never bother to sue you.
If you are a big enough company that Apple notices that you are using a Hackintosh, you probably have enough money for a few Macs by now, so you can buy one.


Better yet, go develop for a company that has money for you. Then you can earn money to buy your own devices for your own projects and future jobs. Besides, you can probably ask for company funding for a Mac (probably a MacBook Pro 13 Fn, but it's better than nothing) straight-away.