Tires are sold to fit the "bead seat" diameter on the rims. The 27 inch tire that was the "standard" for road bikes in the 1970's fits on a rim with a "bead seat" diameter designed for that tire, and the 700c tires that are standard today fit on a rim with a "bead seat" diameter designed for them. Not interchangeable.
A different question is "how many inches across is a 700c wheel, when you include the height of the tire"? Some bike designers seem to forget that different widths of tires impact the height measurement.
As measured from the ground to the top of the tire, a 700c wheel using a tire that is 28mm wide will be slightly taller than a 700c wheel using a tire that is 21mm in width.
In 2007, we have many road bikes that were designed for ultra-narrow 700c tires. If the owner tries to use 28mm or 32mm wide tires, the clearance between the tire and fork will be next to nothing, so owners are limited to ultra-narrow tires.