I upgraded to IOS 16.2 and had the same issue as everyone else, i.e. black screen where my wallpaper should have been. Now I've successfully managed to get my wallpaper back, but only once I'd worked out how IOS16 now manages wallpaper in pairs. Totally different to how we selected lock screen and home screen backgrounds before.
So, in wallpaper option in 'settings' I added my photo as a new wallpaper. It then shows the same photo twice, i.e. a pair. The first photo represents the lock screen wallpaper and the second one in the pair is the home screen wallpaper. The second one appears blurred by default.
Then I long pressed on 'customise' button at the bottom of the photo. Once you release your press, the photo appears with some options to change things. Depending on which photo you 'customise' you will get different options. If you 'customise' the second photo in the pair i.e. your home screen wallpaper, you can deselect 'blur' and also select a different photo for the home screen.
Once you're done editing, it should automatically select that wallpaper pair as 'current'. If not, make sure you select 'set as current' above the photo pair.
See the following article for more information on wallpaper pairs. It helped me to work out what was going on.
https://9to5mac.com/2022/09/14/ios-16-how-to-different-wallpaper-iphone-home-screen-lock-screen/
Hope this helps!