If you have enough space on the C: drive, then yes, the default choice is correct. The whole main advantage of the new installer, which has been requested by user for years, is that now you can freely select the installation folder as you like, without being forced to install into the sim like it used to be.
In fact, it would be best if you DO NOT install into the sim, so you'll be able (at least on P3D 3 and 4), to reinstall the sim entirely, without having to reinstall all the FSDT sceneries, which is the main advantage of the new installation system, which is the one officially suggested by LM.