Why is Two-Phase Commit (2PC) blocking?
Is it because the cohorts don't employ timeout concept in 2PC?


Yes, in one case they can not use a timeout. It is described in the paper too (II.B.1):


  The Two-Phase Commit Protocol goes to a
  blocking state by the failure of the coordinator when the
  participants are in uncertain state. The participants keep
  locks on resources until they receive the next message
  from the coordinator after its recovery


In practice that 'uncertain state' means voting 'yes'. After a cohort votes 'yes', there is no going back, it waits for the global decision. (Other cases are fine: by voting 'no', the given cohort immediately knows that the global decision is also a 'no', and if the coordinator dies even before initiating the voting round, cohorts may decide voting 'no' based on a timeout)