Though that may not be the only argument, it is still a valid one. They gain nothing from leaving it nude. If they want it, they will keep it. Obviously we are just expressing our thoughts. But that's why i believe he said make it an "option". So if you wanted to keep looking at your digital penises, it will be your choice.
No constructive arguments, only discomfort over the human body, check. 
Edited:
1. Youtube. Many big youtubers fear posting Rust because of the nudity and this prevents free advertisements and prevents some great series from being made
How is this garry's problem?
2. Makes no sense. If you were some random survivor in the wilderness you wouldn't be naked. You would start out with clothes with i think should be ruined by the time you control your character. It would look really cool and make a whole lot more sense.
You're assuming quite a lot about the backstory, here.
3. People who can handle it, but rather not. People who aren't mature enough to be able to handle the sight of a penis shouldn't be playing the game in the first place. But when it gets to the point where it's kind of embarrassing to tell people about the game I think it becomes unnecessary.
And here we are with "I don't want to see it". Once again, icky penis icky wins.
Give me three good reasons on why it should be in the game
I'll let the Rust devs defend their decision.