Don't give up! Is a C grade equivalent to a 2.2? If so, a 2.2 is still a respectable degree, and you shouldn't give up, especially as you will be able to improve throughout the year. Do you have any assignments that aren't essay based - e.g. presentations, posters, etc. These also might help raise your final grade. If your second year also counts, this will also bring your grade up. It's definitely not a good idea to give up on a degree just because you don't think you will get a first!
WRT your essays, could the problem be that you aren't linking together your points enough? This might be why your tutor feels they are more like notes. Try and synthesize and analyze your points more, and plan your essays in advance (if you don't already). This might help you come up with an overall theme or argument for your essay, which may help you get higher marks.
Also, is your writing style formal/appropriate? If your writing isn't formal enough, then this could be causing you problems.
If you are doing exactly what you did last year, but your grades have drastically gone down, then I think that's more of an issue with the marking than with you. Maybe take a few examples of your previous work to your tutor, and ask why those pieces got an A, whereas your current work is only getting a C.
Don't drop out though- it would be such a waste of all your hard work up to this stage.