There was such a thing on a sim called Avatar Island. To my knowledge it no longer exists (the sim that is!) The software company who owned and ran the sim was called CyberExtruder. They still have a website but I don't know if they still operate inworld.
Hmmm sounds like either your friend has 'unticked' you, or it is one of those 'SL' glitches, however I don't think that would happen too often. When you say you look on your list and he isn't there, do you mean he isn't there at all, even showing offline? I have had many wierd thing happen to my friends list, so I close it and go shopping!