Who says it would hurt sales? If that was the case, surely games like God of War and The Witcher wouldn't sell so well. There would probably be a public reaction yes but that is not necessarily a bad thing for sales, it certainly dosn't seems to have hurt Rockstar.
The nudity would be pushing a fine line. Certainly there would be a heavy amount of controversy involved (looking back at the uproar caused over Mass Effect's view of a naked backside) and it could even tread a fine line between M and AO in America. Microsoft and Sony both have policies that forbid AO rated games on their consoles. If it ever did end up with an AO rating, you would lose every single console sale. All of them.
The bad controversy involved would be enough to get it on a heavy number of "Do not buy" lists for uptight moral families. Almost no child would be allowed to play the game (Some parents are willing to allow M rated games for violence or language, but nudity would push the limit for many people) which would also make it lose sales. And it would also upset many prudes out there, who would also not buy the game. Yes, I would say that the nudity would hurt the sales. Maybe not in Europe. But I would say that the US, Australia, and several asian countries, all of which would have issue with this matter, count for a very large chunk of the game's sales.
I really hate to bring it back to consoles vs PC's, but this really falls under the same issue that Bethesda can't give every feature to the vanilla game just because console gamers want an experience as dynamic and customizable as PCs. No, I can understand that you may not be able to afford a PC to get mods such as the myriad of nudity mods available for Oblivion. But that's how life works. Is it my fault that I couldn't afford one of the new cars with GPS integration and an iPod dock? No, I get to drive my 10 year old car. It gets me from point A to point B just the same. I would
love to have a new car with fancy features, but that's
not how life works.
If you care
that much about getting nudity in your games, you should be able to afford a new PC working part time over the summer. I bought a new Alienware that way. And I could have even cut the price by 75% if I just built it myself.