In one of James Gosling's talks he tells a funny story about the origin of this design decision. He went around the office at Sun and gave a bunch of seasoned C programmers a written assessment on signed/unsigned integer behaviors. They all got horrible scores, so he decided the feature would be too complicated for a non-systems programming language.
Non-systems languages still need to interact with systems languages, over the network or directly. The lack of unsigned types makes this way more painful and error-prone than necessary.
