I think I have discovered the cause.
I wanted to see if I could alter the voice in Settings, Accessibility, speak selection (ios5 had only an Australian option, which was awful: ios6 has several dialects, much better). I tried the changes on an iBooks selection, which worked fine but still no highlight bar functions, then wondered what would happen if I turned off speak selection.
I turned off speak selection, quit iBooks, restarted the ipad, reopened iBooks and voila! I could get the highlight bar with all its functions except speak.
Just to make sure, I turned speak selection on again, and again all options except speak disappeared in iBooks.
So now I have highlighting but no speak capability.
I have sent all this info to http://www.apple.com/feedback/ibooks, hopefully they will fix this rather glaring bug.