Mine is still there, and think it's one of the best features. I like to keep the phone locked in portrait apart from certain times, and the little rotation icon/feature is great for that.
I'm not sure how it gets turned on/off though.
Mick
Edit: a quick Google and it's because I have gestures enabled. I don't like the navigation buttons, so use full screen and gestures for home, back, etc.
I did see something about gestures also and I have these enabled or I think i do. I have gestures for home, back and this is working fine. Maybe its another gesture? I assume you have rotation set to Portrait?