'Block Caller' feature disappears after updating to iOS 26

It hasn't, it is just in a different location. Personally I have found people using it on every spam call thinking it was helping reduce spam, but that is not the purpose and was frequently used incorrectly with the one tap option to block. The spam calls use spoofed numbers so it is not likely you would receive a call from that same number again and all it does is fill your blocked contact list with hundreds of numbers for no reason. The Blocked Contact feature should be used when you want to restrict contact from a known person, not for spam call use (unless that call ONLY comes from that same number).

Block phone numbers, contacts, and emails on your iPhone or iPad - Apple Support

This is a bug, mostly on iphone SE 2 and 3 with certain cell providers

Report it https://apple.com/feedback

In the mean time, if blocking calls in Phone Recents app, you can press Home button then go back into Phone recents and it should appear. You may have to repeat it.

You are probably in the Unified View (Recents Tab) and not in Classic view.

• Tap the Info icon in the classic View, scroll to the bottom to Block the caller
• Tap the Name of the caller in the Unified View. This will not return the call but instead will open the Contact scroll to the bottom to block the caller.

See the pic below about Classic and Unified View

If you tap the VoiceMail option on the Unified Section, what you see is only a list of VMs. Similarly, if unknown callers option is selected, the list will only include that.

Check if what you want is here: Settings > Privacy & Security > Blocked Contacts