When you open a text message is the response box. Tap the response box and the Qwerty keyboard opens. At least it does on both of our Series 7 watches.
If however, this is not the case for you and you did indeed have the keyboard before you did the update, Force Restart your Apple Watch (something recommended after updating your watch), by pressing and holding BOTH the digital crown and power buttons at the SAME time (keep holding) until you see the Apple Logo, then leg go and your watch will restart fully.