The button will be back in Mendix 5.9, along with other (minor) improvements in mapping documents. If the 'Generate Entities' button turns out to be a big miss in the meantime, we can consider a fix on 5.8.1. Please let me know if it is a real pain and the manual workaround is insufficient.
Yes, it does (by accident) not show up anymore in 5.8.1, due to maintenance in mapping documents. It is not a permanent removal. We are currently discussing if this justifies a minor release. There is a workaround (create entities yourself and map them manually), but that can be a pain in case of large web services or schemas. Let me get back to you.