I noticed that in OS9, not just the latest update. It effectively prevents you from formatting a disk for a PC user, if you didn't get one from them, or you don't have a PC yourself. There are some older 3rd party disk utilities that allow PC formatting, but I don't feel comfortable with software that's untested in the latest OS releases.
Its a bummer, Apple doesn't show you how it can format, read/write and share files with PC users without a problem. Instead they add barriers to what was once quite easy.