Step 1: Use the differential inequality.
We are given that \( f'(x)>f(x) \). This suggests that the growth rate of \( f(x) \) exceeds its own value. Integrating this inequality gives:
\[
f(x)>f(0) e^x \text{ for all } x \in \mathbb{R}.
\]
Since \( f(0) = 1 \), we have \( f(x)>e^x \). In particular, for \( x = 1 \), we get:
\[
f(1)>e.
\]
Step 2: Conclusion.
Thus, \( f(1) \) must be greater than \( \sqrt{e} \) and less than \( e \), so the correct answer is \( \boxed{(C)} \).