Yes. It's the faust.
More specifically, it's the combination of high CQC firepower, cloaking and the faust. That combination gives you no hard counter until medium armour.
That made them about as popular as snipers.
I think you got it just right. Falls dps arty close range should not compete with a specialist AI squad like commandos. It gets even worse when we consider the pfaust. Even though an assault unit belongs more to aggressive design factions like OKW rather UK, falls are still too reliable.
Is it possible to change the falls damage output curve to be something in between stgs and lmg42?