I just set up a new site with 3.4.2 also and was freaking out a little bit when I could not find the option to choose what page was the front page. I thought I was losing my mind for a minute or two. They just moved it.
From the Dashboard select “Appearance”
Select “Customise” on the Theme that you are using.
A fly-out leaf will open that will give you options to select for the Theme. One of them is “Static Page”. You have the same choice as you did previously where any post, latest post or any page can be your static front page. It’s all good!