I don't see a (mouse-clickable) toolbar option to blockquote a section of text in the new Compose And Reply Experience, but you can use the keyboard shortcut Ctrl-Shift-9. And who wouldn't remember that?
Also, you can increase indent with Ctrl-] (control key + right bracket) and decrease it with Ctrl-[ (control key + left bracket).
Full list of keyboard shortcuts available by hitting ? when in Gmail (obvs, you'll have to click outside the area you're typing in, if you're in the middle of composing a message), and also here.
[Update 2013-04-07 02:04] My bad. It actually is possible to blockquote and indent text using the mouse:
I.e., click on the A button. In the pop-up toolbar, click the button second from the right and then choose from the next pop-up toolbar.