Available ‘Image Size’ selector on the Image Block properties when editing a post or page
Only Image dimensions (width and height) fields are displayed but no dropdown image size selector
Chrome / Windows 10
This capture shows a ‘pre-upgrade’ uploaded image on the user’s site:

This capture shows a ‘post-upgrade’ uploaded image on the user’s site:

Please note that the dropdown image size selector comes back after reverting the site to a simple site.
Some additional discussion here: p9F6qB-64S-p2
This is a curious issue. I can verify the problem on the affected user's site, but I can't seem to reproduce it on a testing site.
I've tried it twice, and in both instances, I can still see the image size selector. 🤔
@mcampal or @galakhyati would you mind taking a look at the steps I've outlined about how I'm reproducing the problem? Is there anything different from how either of you are replicating the issue?
The Image Size option is not showing for the images that were existing on the page/post while the site was simple: https://d.pr/v/HF7WVg/dUSpizYvO8
So the only missing steps from the ones you followed was to add an image on a page/post while the site was on a simple site, not just uploaded to the media.
Now if you add another image on the atomic site, it shows the Image Size option: https://d.pr/v/RZEspI/4qP7G55OMf
So basically the existing images on an atomic site is not showing the Image Size option. Hope that helps, please ping me if need any further help in replicating the issue.
Most helpful comment
The Image Size option is not showing for the images that were existing on the page/post while the site was simple: https://d.pr/v/HF7WVg/dUSpizYvO8
So the only missing steps from the ones you followed was to add an image on a page/post while the site was on a simple site, not just uploaded to the media.
Now if you add another image on the atomic site, it shows the Image Size option: https://d.pr/v/RZEspI/4qP7G55OMf
So basically the existing images on an atomic site is not showing the Image Size option. Hope that helps, please ping me if need any further help in replicating the issue.