It seems a lot of users have noticed this with the most recent OS' released. Kind of weird for it to be removed really, as many users actually enjoyed having the function there. Now that it's gone, many folks have been
calling blaming it on a bug. Fact is folks, it's not a bug it's actually intended.
In earlier BlackBerry Device Software versions the mute key was used to turn standby mode on. Due to changes in the lock key functionality on the BlackBerry smartphone starting in BlackBerry Device software 5.0, the mute key no longer places the BlackBerry smartphone into Standby mode. The mute key will still function to mute calls in the phone application.
Sorry to break the news to those who used the function. It doesn't seem as though the function will be coming back anytime soon. While I never really used the option myself, I'm sure some folks out there wouldn't mind if a 3rd party developer looked into overriding the setting. At the same time, I'm sure some may see it as an improvement to the OS.