*(++p) --- what did you think it would do without the parentheses...?
isdigit(ch) && ch != '8' && ch != '9' --- why not the simpler ch >= '0' && ch <= '7' ?
That code reminds me of FizzBuzz and the huge gap in competence it demonstrates, i.e. a surprisingly large number of "programmers" fail to write correct solutions to the simplest of problems. Perhaps "unescape a string" needs to be an interview question with as much attention as FizzBuzz, both because it has a practical application and can show a lot about someone's skill. Admittedly, I may be biased because I have done a lot of parsing and other compiler-ish work, but parsing text is really not an uncommon thing to do in a lot of applications.
Yeah, pointer arithmetic with raw string handling is usually bad news bears. I wonder if it's possible to write a bot that grabs every "string.c" or "str.c" (etc.) from GitHub and looks for this stuff.
