Why do people think that small airplane pilots need parachutes?
Because they lack information. I fly a Cessna 172 and even if the engine goes out its ~9:1 glide ratio means I have a decent amount of time to find a place to put down. I live near a number of blue shield interstate highways so in a worst case scenario I can put down on one of those or in the median between them. I haven't flown in (or around) mountains yet but I can't envision many situations in which it would be preferable to get out of my plane. That said, if I had to get out it wouldn't be hard. If you can get the door open, once you take your seatbelt off you could just lean out and fall headfirst. For people with Archers and the other low wings getting out would not be much fun at all.
The one situation that might apply here is what I call the "death canyon". Get into a gradually climbing canyon at a good altitude, and you find yourself unable to climb out (many small aircraft don't climb well at 10,000+ feet) and you can't turn around because the canyon is too narrow. In this particular case you would have plenty of time to
1) realize that you're in trouble
2) get out of the plane, if you're wearing a parachute.
I'm not saying that is what happened in this case, merely that it would match. Having said that, I can't imagine wearing a parachute in a small plane; it would be awfully uncomfortable.